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Thursday, 5 July 2012

Latest repossession trend in UK

Research shows that the North and South of UK face vast differences as far as repossession is concerned. Research from e. surv chartered surveyors point out the situation of higher repossessions in North UK as compared to South UK.

Report points the causes of higher unemployment, austerity and effects weak economy jolting the Northern UK.  The highest repossessions are faced in the North East, M62 corridor and Greater Yorkshire, while, the South and South East, faces fewer repossession.

Report marks at the condition of the North UK’s employees who hit by the economic downturn, are mostly working in the public sector, making them unable to repay their mortgage payments.

‘Banks are playing a vital role in keeping people in their homes. They’ve been increasingly forbearing to borrowers in mortgages in arrears, and this has kept repossessions levels deflated. But it can’t last forever. The pace of public sector austerity is quickening, and the economy has ground to a standstill. This will push up unemployment and pillage personal finances, forcing more people into mortgage arrears,’ said Richard Sexton, business development director of e.surv.

‘On top of that, the cost of funding mortgages is increasing for banks. Their balance sheets are being stretched to busting point by the euro zone crisis, which will mean they simply can’t afford to support as many struggling borrowers. With the north more exposed to the grind of public sector austerity and a downturn in the economy, the north-south divide in repossessions levels could become even starker over the coming months,’ he explained.

‘Spending cuts, negative real wage growth, falling house prices and public sector unemployment have hit the north much harder than the south. This has opened up a gaping geographical divide in repossessions levels. With local economies in the north declining faster than their southern counterparts, proportionally more northern borrowers have struggled to keep up with their mortgage repayments, and banks have been forced to repossess more  homes,’ Sexton pointed out.

‘The South and South East, with a bigger proportion of the workforce employed in the private sector, haven’t been left as groggy by the economic blows dealt by the government’s austerity programme,’ he added.

Repossessions in North east were higher than the national average of 15 per 10,000 households, Darlington and Durham, facing n average of 24 repossessions per 10,000 households, 60% higher than the national average.  Whereas, repossessions were much lower across the Cotswolds, the West Midlands, the West Country and the southern coast of England, almost around 12 to 13 repossessions per 10,000 households in the second half of 2011, some 20% lower than the national average.

The reason for lower rate of repossessions in South UK is mostly because there are a great number of retirees with huge savings, and also the employment in the public sector is much lower. Much of the people there are into private sector, making them not affect by the economic jolts of the government’s austerity program.

‘Repossessions levels can vary wildly, even within a confined geographical space, thanks to local disparities in affluence and employment rates. Particularly in larger cities, there are can be pockets of wealthy borrowers close to council estates,’ said Sexton.

‘We’re seeing a broader trend of less affluent, higher risk borrowers gravitating towards the city centre, with wealthy homeowners moving into the leafy suburbs. London is a slightly different beast. It is the most pronounced example of how repossessions can vary locally. It has wealthy enclaves, like the City and Canary Wharf on the doorstep of poorer areas like Tower Hamlets and Dagenham,’ he added.


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