Broker Jonathan Barnett, of All Mortgage Matters, claimed that the situation with Victoria Mortgages going into receivership was just the tip of the iceberg as the US non-conforming crisis hit the UK. Barnett claimed that other lenders could soon follow Victoria Mortgages into trouble, and claimed that repossession rates could reach levels similar to those seen in the early 1990s.
Barnett said: “I believe this is a delayed time-bomb as the Base Rate rises wouldn’t have taken full effect immediately as most people are on fixed rates, but in the early 1990s 99 per cent of people were on variable rate mortgages. Adverse credit customers can struggle to get decent rates and I sense that a lot of people won’t be able to afford to pay their mortgages.”
In August the Council of Mortgage Lenders (CML) published its half-yearly data on mortgage arrears and possessions, which showed that possessions rose sharply to 14,000 – an increase by almost 18 per cent compared with the first six months, and up by 30 per cent compared with the first half of 2006.
Although the figures were higher than in recent years, a return to the levels of 15 years ago would be heavily feared by mortgage lenders, it has been suggested.
However, Bernard Clarke, head of communications at the CML, said: “There is a huge difference between now and 1991 and we don’t anticipate that the current market will fall to those levels.”
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