Repossession Fears Take Hold - 1 in 5 worried about repossession reveals Equifax survey
As the housing market continues to stall, the latest survey* from Equifax, the leading online credit information provider, reveals that 20% of homeowners are worried about being repossessed. And, significantly, 4 out of 10 home owners say that they would voluntarily give up their home if they couldn’t keep up their mortgage payments.
“Our survey shows that the credit crunch is taking its toll on home owners” confirmed Neil Munroe, External Affairs Director, Equifax. “And it is particularly worrying that 38% said they would voluntarily give up their home if they couldn’t afford monthly repayments. This is a very drastic measure and really should only need to be taken as the very last resort. Lenders have a responsibility to work with home owners facing financial difficulty, so voluntary repossession really should be the final step if there are no other options.
“Interestingly, 72% said they would not consider sell and rentback if they were facing repossession.”
The financial pressures facing home owners were also highlighted by the fact that a third said they would opt for a mortgage five times their own income to get on the property ladder or to move to a bigger property. With the Council of Mortgage Lenders (CML) reporting that more than 23,200 people who took out 100% mortgages in the year to 31 March could face negative equity, this could prove to be very high risk for home owners.
“A staggering 80% of those surveyed think there isn’t enough access to housing people can afford” continued Neil Munroe. “This probably explains why people are prepared to stretch themselves to the limit, just to get on the property ladder. However, this can lead to major financial difficulties further down the line. Although the numbers of mortgage arrears are still low, the lack of transactions in the property market will eventually filter down to the high street, as well as professions such as builders and plumbers, putting further strain on the economy.”
*The survey was conducted at the beginning of June 2008 amongst 829 Equifax customers.