The comprehensive ‘Domestic Arrears Report’ carried out by law firm Irwin Mitchell’s field agency business, Ascent, analysed data from over 24,000 households across the UK which have missed monthly mortgage payments and subsequently undergone debt counselling on behalf of their lender.
During the second quarter of 2012, Ascent’s ‘Default Debt Paid’ index, a figure which shows the proportion of homeowners who paid off some of their mortgage arrears, increased by 11.1% over the last three months to 60.3%. This compares to 36% of homeowners who were paying debt back in Q3 of 2009.
Significantly, those who have fallen behind with their mortgage in the past are also now paying back larger chunks of their defaulted debt.
Out of the 2,652 who received a visit or telephone call from a debt counsellor during the second three months of 2012, almost 43% paid an amount back equivalent to or more than one month’s mortgage - representing a significant rise on the 37.5% who did the same during Q2 in 2011. Only 27% paid this amount in the last three months of 2009.
In 2009, just 1% cleared their arrears completely. Most recently, however, this figure reached 4%.
Niall Gilhooley, chief executive at Ascent, said: “Taking into account the levels of uncertainty in the economy and a fall in disposable income caused by falling wages and rising VAT, it is very pleasing and encouraging to see that homeowners are still more likely to accept a debt counselling visit and also pay off more of their arrears.
“Usually there is a close correlation between GDP and our DDP figure, but with such a rise in the latter during the last three months, this is difficult to detect. Once again it appears that despite financial hardship, families are doing all they can to hold on to their home.”
Home visits are carried out on behalf of most mortgage lenders after a household has defaulted on their mortgage. During the visit, or phone interview, counsellors discuss the outstanding arrears and aim to develop a sustainable and affordable payment plan for clearing the debt.
