Rising Mortgage Payment Difficulties Reported

Data indicates an increase in East Yorkshire residents struggling to meet their mortgage obligations. Hull County Court informed the BBC that it processed 142 claims for mortgage possession in the initial three quarters of 2024, a rise from the 133 claims recorded throughout the entirety of 2023. Hull and East Riding Citizens Advice, an organization offering complimentary court representation since 2015, noted a surge in its staff’s workload. According to Manager Ray Davies, escalating interest rates contributed to homeowners defaulting on their payments. He also mentioned that the service’s personnel were increasingly assisting private tenants affected by buy-to-let landlords experiencing difficulties in covering their mortgage costs. UK Finance, a prominent trade association, highlighted that despite an uptick in possession orders, they “remain low compared to historic norms,” further stating that possession “is only ever a last resort.” Mr. Davies stated: “We are seeing more mortgage possessions going through the County Court in Hull than we have since our court representation service started in 2015.” He further commented that present interest rates are “far higher than the norm” observed over the last 15 years or more. Mr. Davies remarked: “Often it is when fixed term, cheap rates come to an end, borrowers can suddenly find their mortgage payments are hundreds of pounds higher per month. “Add in the cost of living crisis as well, [and] this can become very serious.” Interest-only mortgages also presented difficulties, according to Mr. Davies, who clarified that “in times gone by,” applicants for such mortgages were permitted a reduced monthly payment, covering only the interest, with the principal sum intended to be repaid through an alternative means. He elaborated: “This was often an endowment policy that grew and matured to cover the original amount borrowed.” He continued: “We are seeing many [cases], where no such ‘vehicle’ was ever put in place, and at the end of the term, up to 25 years, the full amount originally borrowed is still outstanding. The money cannot be raised, and the property is lost.” Mr. Davies also noted a rise in possession proceedings targeting mortgaged properties owned by landlords—known as buy-to-lets—where the property is seized because the landlord cannot fulfill mortgage payments. He stated: “Tenants, who are in the property paying rent, are evicted due to the possession order against the landlord.” He added: “Tenants are losing their homes when they never missed a rent payment.” He indicated that job loss, resulting from illness, redundancy, or other individual circumstances, continued to be the primary cause for individuals losing their residences. UK Finance issued a statement asserting: “Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort after other options have been explored with the customer.” The statement further noted: “While possession numbers have been increasing they remain low compared to historic norms.” It concluded: “Any customer who finds themselves in financial difficulty should speak to their lender at an early stage, as the industry continues to provide a range of tailored support options to anyone who needs help.”