Expert warns of repossession rise

An increase in the Bank of England base rate could lead to a rise in repossessions later this year and into 2010, an expert has said.

Money advice coordinator at the UK Insolvency Helpline Ian Boden-Smyth said one factor keeping down the numbers of homes lost is the cost to lenders of taking such action, making them reluctant to do so.

Another is that interest rates are low and this has helped homeowners switch to interest-only remortgages to make their payments more affordable, he observed.

Mr Boyden-Smith suggested this could create a time-bomb if rates rise, stating: “If they go up – three, four, five, six per cent – that is where the problems are going to arise.”

Such an eventuality is likely in the later months of this year onwards, he forecasted.

Figures from the Council of Mortgage Lenders out this month revealed that the number of repossessions dropped from 12,700 in the first quarter of this year to 11,400 in the second.

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