Private Finance comments on UK Finance Mortgage Arrears and Possessions Data
Shaun Church, Director at Private Finance, comments on the latest release of data on the Mortgage Arrears and Possessions by UK Finance.
“We may live in turbulent times, but homeownership is remarkably secure, with homeowner possessions at their lowest level in almost 40 years. A sustained period of low interest rates has made repaying a mortgage not only more affordable, but also more predictable. Lenders are also now duty bound to work with any borrowers struggling to repay their loan to put a realistic repayment plan in place.
“Doomsayers will argue that trouble is brewing for when rates do start to rise again. But lenders have stringent tests in place that ensure borrowers can afford their loan if rates rise by a far higher percentage than is likely. This means that, assuming there are no dramatic changes in their circumstances, borrowers should be able to comfortably accommodate slightly higher repayments when rates to begin to creep up.
“The incredibly low level of arrears and possessions makes the case for wider availability of high loan-to-value (LTV) products. Affordability tests are clearly working, and with a secure system in place, there is no reason why loans of 95% or above should present any danger. Saving for a deposit is one of the biggest financial hurdles many will face, and for some is unsurmountable. Better availability of high LTV mortgages would help to remove this barrier and put buyers’ homeownership prospects on a more equal footing.”
Kindly shared by Private Finance