Recession return could lead to repossession levels increase

Wed, 23 Nov 2011

A return of the recession is likely to result in repossession numbers in the UK doubling, it has been claimed.

According to Standard and Poor's, stunted economic recovery coupled with a gradual rise in interest rates over the next two to three years could see arrears levels escalating by more than one-fifth.

The ratings agency noted in a report entitled Scenario Analysis: Are UK Mortgage Borrowers between a Rock and a Hard Place? that in a pessimistic scenario, repossession rates could soar to higher than those witnessed in 2009.

Mark Boyce, credit analyst at Standard and Poor's, which has offices in 23 countries around the world and a history stretching back more than 150 years, stated: "Even in an optimistic scenario - where the economic recovery picks up - we found that arrears and repossession rates could increase due to higher interest rates."

Despite the predictions, the report revealed mortgage arrears and the number of dwellings taken into possession has declined at a slow rate since the middle of 2009, but there are fears these levels are being distorted due to record-low interest rates.

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