REPOSSESSIONS could begin to grow again in the UK due to a stubborn core of subprime mortgage-holders who are still falling behind on their payments, according to research by Standard and Poor’s.
Despite an overall improvement among subprime mortgage-holders, those with the lowest credit ratings, accounting for around £7bn’s worth of mortgages overall, show little progress.
“The proportion of borrowers in severe arrears remains stubbornly high,” say the report’s authors, Andrew South and Mark Boyce.
“Nearly 60 per cent of those in severe arrears in September 2009 were in the same position a year later,” they say, showing that those at the very bottom of the property ladder are struggling to get back on track after the financial crisis.
They predict that with austerity cuts, unemployment growth and the possibility of interest rate rises at the end of this year, the UK could see a rise in repossessions.
“An economic shock to borrowers in severe arrears could result in a spike in new repossession cases,” said the report.