Debt Management Could Ease Pressure on Struggling Homeowners

Salford, United Kingdom, March 13, 2010 --( Responding to a claim by the Council of Mortgage Lenders (CML) that repossessions and mortgage debt problems could continue for years, debt management company Gregory Pennington advised homeowners to keep a close eye on their finances, and said that anyone with mortgage arrears should look at the reasons for their financial problems and try to find a solution.

The company added that there are a number of debt solutions that could help homeowners who are in arrears because of other debts - for example a debt management plan or an IVA (Individual Voluntary Arrangement), both of which could help to make other debts more affordable and make more money available for homeowners to make their mortgage payments.

In a recent report, the CML said it expects the number of repossessions to rise by 15% this year, up to 53,000 from 46,000 in 2009. Over the same period, it predicts that the number of people in arrears (of at least 2.5% of the outstanding balance) would rise from 188,500 to 205,000.

The report added that based on the pattern seen in the early 1990s, it expected to see a slow 'bulge' of repossessions over a number of years, rather than a sudden 'spike'.

The CML said that one of the biggest factors affecting repossessions would be interest rates. While low interest rates give more "breathing space" to consumers, higher rates would have the opposite effect on the most vulnerable homeowners.

Future house prices and "progress towards wider economic recovery" would also have an impact on the outlook for arrears and repossessions, the report continues.

An expert at debt management company Gregory Pennington said that the CML's report highlights the continued struggle for many homeowners, despite the UK pulling out of its recession.

"Even though there are many signs of recovery in the economy, problems for homeowners are likely to be more long-lived. Trouble in the economy tends to take a while to 'filter through' to homeowners, and we may well see increasing arrears and repossessions even as the economy begins to grow again.

"But it's important to remember that problems with mortgage arrears are not necessarily an isolated problem. In most cases, there will be a combination of other factors causing the homeowner to struggle with their mortgage payments - such as high costs of living, or other existing debts.

"Anyone who finds that their debts are affecting their ability to keep up with their mortgage should contact an independent debt adviser to discuss their options as soon as they can.

"If they simply can't afford to repay their debts, one option might be a debt management plan - an informal arrangement that can reduce their repayments to an affordable level.

"Alternatively, if it doesn't look like the borrower will ever be able to pay off the debts in full, an IVA [Individual Voluntary Arrangement] could help them to clear their debts and keep their home.

"All of these debt solutions have their downsides, however, which is why getting a full rundown of each debt solution from a debt adviser is so important."
Gregory Pennington
Melanie Taylor
0845 056 6480