The North suffers most from mortgage arrears
According to recent research, homeowners in the north of England are more likely to be behind on their mortgage payments, and be suffering due to their homes falling into negative equity.
In the fourth quarter of 2011, the amount of borrowers behind on their mortgages rose to 3.8% average, with the rate rising to 4.4% in the north, compared with 3.4% in the south. Similarly, whilst 5.6% of homeowners were in negative equity over the whole of England, this figure rose to 8.5% in the northern towns and cities.
Experts suggest that these figures merely show a pattern caused by the current weak economy and problems in the housing market and it is just bad luck that those in the north are suffering the worst. Southern towns and London in particular do tend to break the pattern somewhat in these kinds of studies, possibly because of being so close to the capital and the high rate of people moving in and out of these towns.
Falling behind on mortgage repayments is a dangerous situation to be in as mortgage lenders do not tend to be as relaxed as other creditors, giving only a couple of missed payments before they take matters further and start the process of repossessing the home. However, the situation in the mortgage market at the moment is not making the situation easy for current homeowners who are suffering severely from the rise in interest rates and the tightening of restrictions on some mortgage products. There has been a marked increase in those borrowers who have become trapped in their mortgage, with the interest rates having risen to a point where they can no longer afford the monthly repayments, but the lack of mortgage products on the market meaning it is practically impossible to switch to something more affordable.
An even more difficult situation is where the property falls into negative equity, which means that the borrower owes more on their mortgage than the property is actually worth. This happens when properties start to decrease in value while the borrower is still paying back their mortgage, eventually meaning the property has depreciated in value so much that it is worth less than it was new. For most borrowers, and especially those with contractor mortgages, this can lead to a desperate situation, where if they miss their mortgage payments they may find their home repossessed, and still owe the lender money for what is left on their mortgage.
Article by: Susan Grant, Senior Mortgage & Financial Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
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