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Figures published today by the Council of Mortgage Lenders (CML) show that the number of repossessions in the third quarter of this year reached 9,200, up 100 from 9,100 in the second quarter of 2011.
So far this year, a total of 27,500 properties have been taken into possession – 4 per cent fewer than in the equivalent period last year. Levels of mortgage arrears remained reasonably stable over the same third quarter period.
Bev Budsworth, managing director of multi award-winning debt management company,The Debt Advisor, stated: “It’s not surprising to see the levels of repossessions on the rise again. I suspect that we are not seeing the true picture yet as the actual number of orders takes time to progress through the system. Again, I think that record low interest rates are damping down the figures and holding back what could be a potentially huge increase.
“The figures also show the number of people with large arrears, over 2.5 per cent, has fallen to 161,600 down 2 per cent from 165,200 at the end of September 2010. Despite these improvements there are still a large number of cases with significant arrears: 27,300 loans have arrears of more than 10 per cent of the outstanding balance. Though it’s encouraging to see a dip in the numbers of people in large scale arrears, there is still work to be done to improve the picture for borrowers on a wider basis.”
Bev explained: “The first half of this year saw slightly fewer than 100 properties being repossessed every day. The CML is sticking to its revised forecast that repossessions in 2011 could reach around 40,000 – a similar figure last seen since the height of the credit crunch in 2009 and, before that, not seen since 1996. It also held its view that 2011 would close with around 180,000 mortgages in arrears.”
Desperate measures
“Low interest rates and lenient lenders have definitely helped limit today’s figures but it’s clear now that other economic factors are forcing people to take more desperate measures,” she added.
“Rising inflation, a 17-year high in unemployment, the spiralling cost of living and a very weak mortgage market have all compounded to limit people’s options and remove the financial ‘safety net’.
“This is driving people over the edge and forcing them to throw caution to the wind. We are continuing to see a rise in the ‘impoverished middle classes’ having to pay for day-to-day costs on their credit cards. In some of the more extreme cases, they have no other option than to pay their mortgage on their plastic just to keep the roof over their heads!”
Bev’s comments echo the findings from homelessness charity, Shelter earlier in the year. According to its research, more than two million people had used a credit card to pay their mortgage or rent in the previous 12 months – an increase of nearly 50 per cent.
She continued: “With one house in the UK being repossessed approximately every 15 minutes, keeping your home continues to be a daily struggle for some. I would never advocate using a credit card to settle a mortgage payment, especially when the average interest rate is around 18 per cent. I would always urge people to speak to their lender as early as possible. Work out what you can afford to repay with a simple income / expenditure calculation and present them with a solution, not just a problem.”
Help from lenders
Although the number of repossessions has reduced from a high of 47,700 in 2009, it’s still nearly five times the level that was seen in 2004. Credit Action statistics reveal that the typical adult owes 122 per cent of average earnings – a figure that is set to rise with the threat of higher debt and unemployment, according to Budsworth.
“Lenders are helping and are continuing to exercise their discretion when it comes to people in arrears. Various schemes have had limited success but the real key to keeping a lid on the figures is the record-low interest rates. However, there is still help available to people finding it difficult to meet their mortgage commitments.
“As long as people can hold onto their job, dealing with the mortgage arrears should always be the first priority, followed by unsecured debt. That’s exactly where Individual Voluntary Arrangements (IVAs) and debt management plans can help as they automatically prioritise payments to secured lenders, which includes provision for clearing arrears. It is then relatively simple to get unsecured loans on reduced payments until the individual can increase their income.
“Mortgage Payment Protection Insurance (MPPI), not to be confused with Payment Protection Insurance (PPI) which has had some pretty bad press recently, is also really important. It’s basically private insurance taken out to make sure mortgage payments are made even in the event of unemployment or sickness. Often referred to as ASU (accident, sickness and unemployment) insurance, this type of insurance is more important now than it’s ever been.
“Above all, effective budgeting is vital if you are struggling with your mortgage arrears. When you know what your surplus is, you can go back to your lender and negotiate a provision for mortgage arrears in order to clear your arrears over a reasonable period of time – usually between two and four years, or even the remainder of the mortgage.”
Bev concluded: “We can no longer ‘throw caution to the wind’ as we did a decade ago. We must all make a more planned and concerted effort to plan our finances better and learn to live within our means.”
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© 2011 Clark Richards is a trading style of Complete Money Limited.
Oxford House, Oxford Road, Macclesfield, SK11 8HS Company Registration No. 6246376.
Consumer Credit License No. 0609783. FSA Firm No. 478215.
This privacy policy sets out how Clark Richard’s uses and protects any information that you give Clark Richard’s when you use this website. Clark Richard’s is committed to ensuring that your privacy is protected. Should we ask you to provide certain information by which you can be identified when using this website, then you can be assured that it will only be used in accordance with this privacy statement.
Clark Richard’s may change this policy from time to time by updating this page. You should check this page from time to time to ensure that you are happy with any changes. This policy is effective from 05/08/2009.
What we collect – We may collect the following information:
“What we do with the information we gather” – We require this information to understand your needs and provide you with a better service, and in particular for the following reasons:
“Security” – We are committed to ensuring that your information is secure. In order to prevent unauthorised access or disclosure we have put in place suitable physical, electronic and managerial procedures to safeguard and secure the information we collect online.
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Controlling your personal information – You may choose to restrict the collection or use of your personal information in the following ways:
We will not sell, distribute or lease your personal information to third parties unless we have your permission or are required by law to do so. We may use your personal information to send you promotional information about third parties which we think you may find interesting if you tell us that you wish this to happen. You may request details of personal information which we hold about you under the Data Protection Act 1998. A small fee will be payable. If you would like a copy of the information held on you please write to Oxford House, Oxford Road, Macclesfield SK8 8HS. If you believe that any information we are holding on you is incorrect or incomplete, please write to or email us as soon as possible, at the above address. We will promptly correct any information found to be incorrect.
The agreement between you and us is made on the following terms:
“You” – Our client and partner where any of the debts are in joint names)
“Us” – Clark Richards Financial Management is a trading style of Complete Money Limited. Registered Office: Oxford House, Oxford Road, Macclesfield, Cheshire SK11 8HS. Licensed by the Office of Fair Trading under Consumer Credit No. 609783 and FSA Registered under Reg. No.478215.
“Creditors” – Any and all of your unsecured creditors whose details you will provide to us in accordance with Section 3.
“Debt Management Program” – A plan of repayments produced by us in accordance with section 4.2
“Period” – The period which the Debt Management Programme is in operation.
“Fees” – The fees to be paid by you to us in accordance with the Debt Management Programme.
2 Agreement
You request us and we agree to provide you with a debt counselling advisory and adjusting service in accordance with these terms and conditions. You authorise us to negotiate on your behalf with your creditors. This agreement shall continue until final repayment to the Creditors is made in accordance with the Debt Management Programme, unless it has been terminated beforehand in accordance with Section 6.
3 Your Responsibilities
3.1 You will provide to us on request information relating to your finances. This will include but will not be limited to details of your income and expenditure, your creditors and any agreements you have with them, any loans, or mortgages you have, your dependants and judgements’ made against you or any other enforcement action being taking against you.
3.2 You will sign any necessary forms of authority or any other documents so that we may negotiate with your creditors on your behalf and generally carry out our obligations under this agreement.
3.3 You will pass all correspondence from your Creditors to us and keep us informed of any dealings you have with any Creditors whether we are negotiating with them or not. Once the Debt Management Programme has been agreed, you will not make any expenditure over or above your reasonable living expenses as calculated in the Debt Management Programme. You will not use your credit cards, nor incur further debts.
3.4 You will consult with us in relation to your Debt Management Programme of repayments and in relation to any alterations to it or reviews of it. Your payments to us will need to be amended to reflect any reasonable changes which your circumstances dictate. You will make payments to us under and in accordance with the Debt Management Programme promptly and without and deductions.
3.5 On occasions your Creditors will not provide us with balances of your account due to their own company procedures. If these circumstances arise then you will obtain this information for us and supply us accordingly.
3.6 We cannot be held responsible for any legal action taken against you by your Creditors as a result of fraudulent or incorrect information provided by you at the time of acquiring a loan, HP agreement, credit card or any other forms of credit.
3.7 Non contact from you will not be considered as cancellation of the agreement. If any funds are owing to you then written confirmation will be required to release funds owing to you in accordance with Section 6 of this agreement.
3.8 If you do not maintain regular payments we will suspend any action and payments on your account. Your creditors may have to be informed that payments are not being maintained. This may result in your Creditors continuing legal action against you for which we cannot be held responsible
3.9 If you do not maintain regular payments we will suspend any action and payments on your You remain responsible for continuing to pay any secured loans, mortgages, or Hire Purchase agreements and all household bills (including insurances).
4 Our Responsibilities
4.1 We will review your finances, covering your income, expenditure, debts and assets. These must include all debts secured on property or goods, which we will take into consideration but cannot negotiate reduced payments on. We will calculate your disposable income based on reasonable living expenses.
4.2 In consultation with you we will produce a Debt Management Programme by which you can pay off your Creditors out of your disposable income at rates you can afford. The Debt Management Programme will let you make monthly payments to us and will take account of your Creditors and of our Fees. It will not take account of any matters you have not told us about in accordance with section 3. It will also take account of the differing requirements of your different Creditors, if there is more than one.
4.3 We will negotiate with your Creditors and attempt to agree repayment terms with them of the amounts outstanding. In doing so we shall use the Debt Management Programme and we shall ensure that the periodic payments that we agree with your Creditors on your behalf do not exceed your disposable income (less our fee) as calculated by us, for the same period.
4.4 We shall attempt to agree with your Creditors, where appropriate, that they freeze or reduce their interest charges and that they suspend or withdraw enforcement proceedings issued in connection with your agreements with them. In rare instances County Count proceedings may still be actioned against you. In these cases we will assist in completion of all relevant paperwork as required. We can not guarantee to stop legal action by your creditors.
4.5 We shall make payment to your Creditors in accordance with the Debt Management Programme.
4.6 The payment made to your Creditors will be reflected on the statements you will receive from them. A full breakdown of all payments we have made can be obtained on request. On all Creditors accepting the offers of repayment we will issue you with a breakdown of these. In addition we will issue monthly statements showing all payments and receipts of your account.
4.7 Should your circumstances or any other relevant information change during the Period, we shall, in consultation with you and your creditors review the Debt Management Programme and if necessary shall make changes to it in agreement with you and any Creditors concerned.
4.8 From time to time your Creditors will request an up date of your financial situation. We will contact you to review your current financial circumstances and update your Debt Management Programme accordingly. To aid this process we request that payslips are regularly forwarded to us for review.
4.9 All payments to us will be made into our Clark Richards Limited Client Account. This account is separate to our own business accounts and funds held for distribution to your Creditors will be retained for that purpose only. No interest will be payable to you on funds that we hold. At times funds held for distribution to your Creditors will be classed as clients monies.
4.10 During the negotiation process some Creditors may continue to charge interest and other recovery charges. We cannot always prevent these charges being levied. These will however be paid off as part of your Debt Management Programme.
4.11 We can only provide advice on the services that we offer.
4.12 The company takes any complaint regarding its practices very seriously. Any complaints can be sent in writing to the Directors of the company and shall be dealt by them with personally. The directors will return correspondence within 14 days.
5 How we will be paid
5.1 Unless we agree otherwise with you we will take from each monthly payment under the debt management programme a fee equal to 14.9% of the periodic payment under the debt management programme. Subject to a minimum of £30 and a maximum of £90. If in accordance with our records you have conducted your debt management programme satisfactorily we may, at our discretion, waiver the last 6 months management fee.
5.2 Because most of our work will be done at the start of the Period, we will charge an initial fee based on your programme payment. The initial fee will not exceed the equivalent of 2 months’ payments to your Debt Management Programme. The fee will be collected as follows; 100% of the first payment and 100% of the second payment. NO further administration charges will be applied to the initial fee.
5.3 If this agreement is ended in accordance with section 6, we will return any undistributed funds after having deducted the above fees and you will not Have to pay us any more money. This will be made within 30 days of receiving written confirmation in order to allow us time to process all receipts and payments to your account.
5.4 In the case of weekly payments, 4 times the weekly payment will equate to one month’s payment.
6 Termination of Agreement
6.1 If for any reason you wish to cancel, we offer a 7 day cooling-off period from the date we receive your first payment, in which we offer a full refund of any fees which we have taken.
6.2 After the 7 day cooling-off period you may end this agreement by giving us four weeks’ notice in writing.
6.3 We may end this agreement by giving you four weeks notice in writing if any one of the following things happen: 1) You breach this agreement and do not remedy the breach within 7 days of your bringing the breach to your attention; 2) A bankruptcy petition is issued against you; 3) You enter into an Individual Voluntary Agreement/Trust Deed; 4) Where the information provided to us is knowingly incorrect. 5) The information provided by you at the time of acquiring a loan(hp agreement, credit cards or any other form of credit) is deemed incorrect or fraudulent by any creditor, or 6) If we are affected by Force Majeure.
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