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Home repossessions are up 50%. Should we be worried?

The needle on the home repossessions dial is starting to flicker again (PA) (PA Archive)
The needle on the home repossessions dial is starting to flicker again (PA) (PA Archive)

The needle on the home repossessions dial is starting to flicker again.

Latest data from UK Finance today showed 750 owners had their homes forcibly taken away from them in the first quarter of the year, up 50% on the 500 in the last three months of 2022. Should we be worried?

Conventional wisdom has it that lenders are loathe to go down the repossession route these days because of the horrific headlines it generates.

They prefer to find softer solutions such as extending the length of the mortgage to make payments more manageable.

But the times they are a-changing.

As this week’s huge job loss announcements from BT and Vodafone suggest the era of full employment we have enjoyed over recent years is coming to an end just as home owners are having to shoulder huge increases in their mortgage costs.

At the same time house prices are starting to fall, leaving thousands of home owners with negative equity.

It’s a toxic mix for lenders and in some extreme cases repossession is the only option open to them.

But we are not back to the Nineties just yet.

Then tens of thousands of homeowners a year were forced to hand back the keys after getting hopelessly trapped in negative equity nightmares.

And encouragingly the number of borrowers in arrears are still at historically low levels.

Nevertheless the repossessions data is an indicator we should keep a close eye on. It tells us a lot about the level of serious household debt pain being felt in the economy.