A report in a leading industry paper says that despite the Bank of England freezing interest rates at 4.75% for nearly a year, concerns have been raised that arrears will continue to happen and repossessions will increase.
There were almost 26,000 mortgage repossession actions begun in the first three months of this year, which is 35% higher than the same time last year. The increase in repossession orders has been attributed to the five interest rate rises between November 2003 and August 2004.
Our view
People have over extended on how much they have borrowed and even the minor interest rate increases that we saw over the last year or so will have major impact and continue to do so until rates fall.