The firm said that for every property repossessed, at least an equal number were sold because their owners could not keep up with their mortgage repayments.
It stated that while headlines focused on the number of properties taken into possession, they failed to account for the hidden majority that resulted in sale by the borrower to avoid repossession.
Figures from the Department for Constitutional Affairs (DCA) showed that the number of court possession orders in 2006 rose to 89,857 – the highest figure since 1993. Yet of those, 19 per cent resulted in repossession compared with 56 per cent of the 105,283 possession orders made in 1993.
The continued buoyancy in house prices has meant that many people who would otherwise face repossession are instead selling their homes and returning to the rental market.
Paul Walshe, head of lender services at Moore Blatch, commented: “Many people who are struggling to pay their mortgage are just selling their property. This is fine while the market remains strong, but the recent rises in interest rates are likely to dampen demand and may well result in some of these ‘hidden repossessions’ becoming real repossessions.”
However, Ray Boulger, senior technical manager for John Charcol, said: “Anyone struggling with repayments is going to be better off selling their property. To suggest repossession figures are masked is nonsense, as the advice brokers give to those struggling with repayments is to downsize.”
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