Home Repossessions On The Increase

The Royal Institute of Chartered Surveyors (RICS) has warned that home repossessions could increase if interest rates continue to rise.

According to the RICS, for a household with two average salaries, 22% of income goes on mortgage payments. This represents the greatest mortgage burden since 1991.

Low interest rates have enabled people to borrow large sums and this affordability has contributed to the rapid rise in house prices. In the last 10 years the cost of buying a house has gone up by 278% which is way above the increase in incomes. In the property crash of the early 1990s hundreds of thousands of homes were repossessed, but the numbers have been fairly low in recent years. Around 8,000 properties were repossessed by lenders in the first 6 months of last year. However, although this may seem low, it was the highest level for 5 years and may well increase.

Initial costs for first time buyers have also increased rapidly. According to the RICS the deposit, fees, stamp duty and so on comes to a total of £32,784. They have called on the government to build more affordable housing and increase the stamp duty threshold to assist first time buyers.

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