Despite the current wave of economic doom and gloom, a recent report by Ascent has found that UK homeowners who have fallen behind with their mortgage payments are now significantly more likely to pay off some or all of their arrears than two years ago.
The comprehensive study, which analysed data from over 12,500 households, revealed that out of those who had defaulted on their mortgage and received a home visit during Q2 of 2011, over half paid off all or some of their arrears. This represents a 7% increase compared to the same quarter in 2010 and a significant 43% rise from two years ago when just over a third made a contribution.
Significantly, those who have fallen behind recently are also paying back larger chunks of their defaulted debt. Out of the 2,476 who received a visit or telephone call from a counsellor during Q2 of 2011, 37% paid an amount back equivalent to more than one month’s mortgage - twice as high as the proportion who did so two years ago. In 2009, 0.9% cleared their arrears completely whilst most recently this figure reached 2.7%.
Other key findings contained within Irwin Mitchell’s Domestic Arrears Report include:
- 37% of mortgage defaulters who received a counselling visit in Q2 of 2011 paid back all or more than their monthly mortgage amount. Twelve months ago it was 33%.
- The number of mortgage arrears home visits resulting in no financial arrangement being reached fell by 50% during the last 12 months.
- Two thirds of mortgage defaulters accepted a visit from a counsellor in Q2 of 2011. This reflects a significant rise compared to Q3 and Q4 of 2010 where it was 52.8% and 51.9% respectively
Commenting on the findings, Niall Gilhooley from Ascent, explained:
“Although our research points to a large number of people who are struggling with their mortgage, there are some encouraging signs in terms of the effectiveness of home visits and the amount of money people are able to pay in order to settle their arrears. Household incomes are under significant pressure from all sides but it appears people are determined to do all they can to work with their lender in order to safeguard their home."
“It will be interesting to see what will happen in the final quarter and next year but the signs are that this upward trend with repayments will continue for at least the next three months.”
Niall Gilhooley, Operations Director, Ascent Collections Ltd