The number of repossession claims made by banks and landlords in England and Wales has climbed to its highest level in five years, as households grapple with the impact of rising borrowing costs. According to data from the Ministry of Justice, mortgage possession claims filed by lenders in county courts reached 5,343 in the second quarter of 2024, marking a 34% increase compared to the same period last year and the highest figure since the first quarter of 2019.
Landlord possession claims have also seen a notable rise, with a 9% year-on-year increase to 24,495 – a level not seen since 2019 – as both private and social tenants face difficulties in keeping up with rent payments. These possession claims are initiated when lenders or landlords take homeowners or tenants to court in an attempt to repossess their properties.
Despite the recent uptick in claims, the numbers remain below pre-Covid levels, even in the face of the Bank of England’s most aggressive cycle of interest rate hikes in decades. This can be attributed, in part, to the stricter mortgage regulations implemented following the 2008 financial crisis. To put this into perspective, possession claims are significantly lower than the peak of 26,419 recorded in the second quarter of 2009.
Millions of mortgage borrowers have been confronted with substantial increases in their repayments following 14 consecutive interest rate hikes by the Bank of England, a response to the highest inflation levels since the early 1980s. Last week, the central bank reduced interest rates for the first time since the Covid pandemic, lowering the key base rate from 5.25% to 5%. This comes after a series of increases from 0.1% in December 2021.
The additional billions of pounds in mortgage repayments have taken a toll on living standards and pushed the UK economy into a recession last year, as households tightened their belts and reduced spending in other areas. London has been hit particularly hard, with the highest rates of claims for both mortgage and private landlord possessions. Newham, in the east of the capital, ranks among the top 10 for both categories.
Government figures also reveal a worrying trend in homelessness, with statutory homelessness assessments in England increasing by 10.8% to 94,560 in the first quarter of 2024 compared to the same period last year. A
s Aza Teeuwen, portfolio manager at TwentyFour Income Fund, notes, “arrears are slowly increasing, but the actual repossessions are still very low compared to historical standards, which is mostly the result of active servicing done by banks who are now, more than historically, working with their borrowers to bring them back on track.”
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