Repossession fears grow as credit crunch bites
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With savings and pension funds depleted by the recent economic turmoil, pensioners are looking for other ways to supplement their pension and many are using their house as a way of generating cash. More...
20% of homeowners in fear of repossession
Monday, 16 Jun 2008 14:51
One in five homeowners are worried about repossession, as the credit crunch and high inflation pull their fingers around the necks of the UK.
Worryingly, two-fifths of homeowners would voluntarily give up their home if they couldn’t keep up their mortgage payments, a poll by credit reference agency Equifax reveals.
“The credit crunch is taking its toll on homeowners,” said Neil Munroe, external affairs director at Equifax.
“And it is particularly worrying that 38 per cent said they would voluntarily give up their home if they couldn’t afford monthly repayments.
"This is a very drastic measure and really should only need to be taken as the very last resort."
Mr Munroe went on to call on mortgage lenders to act more responsibly with borrowers in difficulty to ensure voluntary repossession is really the last resort.
The research also revealed 72 per cent would not consider a sale and rentback scheme if they were facing repossession.
Despite the mortgage strains homeowners are feeling, a third of those polled admitted they would take a mortgage five times their own income to get on the property ladder or to move to a bigger property.
“A staggering 80 per cent of those surveyed think there isn’t enough access to housing people can afford," said Mr Munroe.
“This probably explains why people are prepared to stretch themselves to the limit, just to get on the property ladder.
"However, this can lead to major financial difficulties further down the line."
He also warned the low level of house purchases – brought on by the decline in mortgage products on the market – would also eventually filter down to the high street putting further strain on the economy.