Repossessions being controlled by low interest rate

Wed, 28 Sep 2011

A low interest rate is one of the reasons house repossessions in the UK have been kept down of late, it has been suggested.

Speaking to the Financial Times Adviser, head of mortgage policy at the Building Societies Association - which represents all the 48 building societies currently operating in the UK - Paul Broadhead explained a considerably higher number of people in the UK would be facing difficulties if the rate was greater than the 0.5 per cent experienced at present.

The industry figure explained there are numerous reasons why repossession levels are lower than they were in the 1990s - such as increased lender forbearance, greater provision of independent money advice and responsible lending .

He stated: "We have historically-low interest rates that have been sustained for such a long period. Without doubt there would have been more borrowers facing difficulties had rates been higher."

Lenders have learnt a lot from the situation in the 1990s and have realised a one-size-fits-all approach is unlikely to prove successful, Mr Broadhead added.

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