Repossessions warning on interest rates
A Tayside property specialist has warned the number of people who fall into arrears and lose their homes could increase as interest rates rise.
- By Graeme Strachan
- Published in the Courier : 01.12.10
- Published online : 04.12.10 @ 03.15pm
Lindsay Darroch, partner and head of property services at Blackadder's, which has offices in Arbroath, Dundee and Forfar, believes lenders will be more inclined to repossess or take over development sites as they realise they have more of a chance of selling them on.
Mr Darroch spoke this week after the number of people who had their homes repossessed fell to a two-and-a-half-year low after rock bottom interest rates helped consumers keep up with their mortgage repayments.
The Council of Mortgage Lenders (CML) said around 8900 properties were taken back by lenders during the three months to the end of September, which is 27% fewer than during the same period of 2009.
Mr Darroch said, "This is the fourth quarter in a row that numbers have dropped since they reached a peak of 12,200. The CML have warned that the trend of falling repossessions could reverse.
"I was recently at an insolvency conference and one of the topics discussed was that there had not been the explosion of repossessions in either residential or development property that was initially expected.
Affordable borrowings
"I think this is down to a number of reasons but the main one is that the historic low levels of interest rates means that borrowing for both individuals and businesses is affordable.
"From my discussions with various lenders, I think they are taking a more pragmatic view of what is the point of repossessing or taking over a development site if there is little or no chance of selling this on in the open market?
"I think this flags potential problems when the economy starts to improve.
"As interest rates rise, this could make mortgage payment unaffordable, increasing the number of people who fall into arrears.
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