Repossessions In Northern Ireland

[Shotoflight]

2 video snippets at link

http://www.u.tv/News/Number-of-NI-repossessions-down/1a85528b-d618-4c7a-8974-a3ff47d3b374

However the crisis here remains worse than in other parts of the UK, with the shock wave from the property earthquake still being felt right across NI.

Ursula Toner from the Housing Rights Service told UTV there is still cause for concern.

"We are pleased to see the decrease in cases being brought to court but, to sound a note of caution, we are still the highest in the whole of the UK for repossessions," she explained.

"We are expecting an interest rate rise and that will seriously affect local borrowers here."

When people have their homes repossessed the pain doesn't end with the eviction - unless they go bankrupt, they still have to pay back the mortgage shortfall.

It is therefore critical how good a price a repossessed home makes on the open market.

New figures show that in NI such properties secure the worst value for money in the UK, with a home typically only selling for 42% of what it is really worth.

That compares with between 60% and 70% in England, Scotland and Wales.

Estate agent Colin Barkley said this can be for a number of reasons, including the condition of the property and the vendor reducing the price if it doesn't sell quickly.

He said: "A lot of them are vacant properties. They maybe haven't been left in the pristine order a caring owner occupier might have left them in, so that can be one of the reasons.

"I think you've also got a very motivated vendor when you're talking about the asset management companies, they're not prepared to let the property sit on the market for three or four months.

"This might be normal in a private sale, but if it's not sold within the month they'll reduce it again, so that can be why the figures aren't good."

The advice being given to home owners at risk of default is to consider selling their house before it is taken off them, as this means they are likely to get a better price than their mortgage company.

[Shotoflight]

Repossession rate for homes in Northern Ireland is highest in the UK

http://www.belfasttelegraph.co.uk/business/news/repossession-rate-for-homes-in-northern-ireland-is-highest-in-the-uk-30509521.html

Northern Ireland is expected to have the UK's highest rate of home repossession this year, according to mortgage service company HML. Greater London would experience the biggest number of repossessions in the second half of the year, at nearly 1,400.

But with 858 repossessions predicted, amounting to a repossession rate of 0.74%, Northern Ireland would have highest incidence of foreclosure.

HML's predictions came as the number of households having their homes repossessed fell to its lowest level since 2006 in the first half of this year, according to the Council of Mortgage Lenders (CML).

HML forecast that Greater London and Wales would have the second highest repossession rate at 0.26%, while the south west of England would have the lowest rate at 0.14%. Ursula Toner, advice services manager with Northern Ireland charity the Housing Rights Service, said: "The fact that Northern Ireland remains the area with the highest numbers of projected repossessions is sadly not a surprise for Housing Rights Service – neither will it be for the thousands of local homeowners at crisis point.

"High levels of negative equity, increased costs of living and a difficult job market have severely impacted homeowners. We would urge anyone experiencing problems with mortgage or secured loan debt to seek advice."

According to the CML, 5,400 properties were taken into possession in the second quarter of this year, marking the lowest number since quarterly records began at the start of 2008.

When this is added to the 6,400 repossessions which took place in the first three months of 2014, the half-year total of 11,800 is the lowest six-monthly tally recorded since the second half of 2006, the CML said. The figures are not broken up into UK regions.

Rock bottom interest rates have been credited with helping to keep people's repayments affordable, and the CML said that while the latest low repossession figures are "clearly welcome", borrowers should be planning now for how they will cope with rates increasing as the economy improves.

[BelfastVI]

2.5% of the population and probably an even smaller percentage of total households.

The number of repossessions here is truly horrific compared to the uk as a whole.

Oh BVI in London and the SE houses are at or a above their 2007 high, the same does not apply to large parts of Wales, Northern England and Scotland. Besides what has negative equity got to do with meeting monthly mortgage payments?

Negative equity has a lot to do with your ability to remortgage, the interest rate you pay and the banks view on how they will get their money back.

People in large negative equity sometimes feel helpless considering the debt to value ratio and default quicker.

[2buyornot2buy]

Negative equity has a lot to do with your ability to remortgage, the interest rate you pay and the banks view on how they will get their money back.

People in large negative equity sometimes feel helpless considering the debt to value ratio and default quicker.

And yet they will be paying a SVR a fraction of what they could have expected when they took the mortgage out.

Does not compute.

[yadayada]

Negative equity has a lot to do with your ability to remortgage, the interest rate you pay and the banks view on how they will get their money back.

They won't be getting their money back very easily if they repossess a house in serious negative equity. This does not make sense.

People in large negative equity sometimes feel helpless considering the debt to value ratio and default quicker.

I've no doubt they feel helpless, but unless they skip the country or go bankrupt, they still have to pay. Is there any evidence of this? If not this also makes no sense./quote]

[2buyornot2buy]

From my reading of the MSE site it seems that mortgages became unaffordable for these people when the expected HPI disappeared. If they could afford it with a false value in 2006 they should be able to afford it with its 50% off value. It's the lack of HPI that is sickening these folk.

Bingo

[BelfastVI]

Oh BVI in London and the SE houses are at or a above their 2007 high, the same does not apply to large parts of Wales, Northern England and Scotland. Besides what has negative equity got to do with meeting monthly mortgage payments?

Wales, Scotland and the north of England are only 'suffering' 5% to 9% negative equity compared to 49% in Northern Ireland (Nationwide). In the other regions people can sell on their houses or 'investment' and more than likely pay off the associated debt. In NI, for many that is not possible and the bank is more inclined to take control..

[BelfastVI]

I've no doubt they feel helpless, but unless they skip the country or go bankrupt, they still have to pay. Is there any evidence of this? If not this also makes no sense./quote]

Are you looking evidence that increased negative equity results in increased reposessions. surely the figures mentioned earlier clearly show this.

[yadayada]

I've no doubt they feel helpless, but unless they skip the country or go bankrupt, they still have to pay. Is there any evidence of this? If not this also makes no sense./quote]

Are you looking evidence that increased negative equity results in increased reposessions. surely the figures mentioned earlier clearly show this.

The figures show repossessions are higher in Northern Ireland. This is not attributed to negative equity, and the justifications given above are false.

[yadayada]

If someone is servicing their mortgage, why would a bank take control?

Repossessions are not due to negative equity.

Edited August 18, 2014 by yadayada

[2buyornot2buy]

If someone is servicing their mortgage, why would a bank take control?

Repossessions are not due to negative equity.

Not to mention the fact that they will be on an SVR or lifetime tracker with a rate much lower that they could have expected to move onto in 2007.

If anything they should be overpaying, not getting reposessed.

[BelfastVI]

Not to mention the fact that they will be on an SVR or lifetime tracker with a rate much lower that they could have expected to move onto in 2007.

If anything they should be overpaying, not getting reposessed.

if you are in negative equity you will not get a 'soft interest rate' you generally need to have a 60% or 70% loan to value to get these. You say it is a 'fact' they are on a much lower rate than they would have expected in 2007. I doubt that if they are in serious negative equity.

[BelfastVI]

The figures show repossessions are higher in Northern Ireland. This is not attributed to negative equity, and the justifications given above are false.

I find it strange you see no correlation between high negative equity and the high rate of repossessions we were experiencing.

[2buyornot2buy]

if you are in negative equity you will not get a 'soft interest rate' you generally need to have a 60% or 70% loan to value to get these. You say it is a 'fact' they are on a much lower rate than they would have expected in 2007. I doubt that if they are in serious negative equity.

It's a fact once your product ends you move onto lenders SVR.

It's a fact these are much lower than in 2007. It's a fact in some cases 5%+ lower.

You do not need 60% LTV to move onto the SVR.

Edited August 18, 2014 by 2buyornot2buy

[2buyornot2buy]

I find it strange you see no correlation between high negative equity and the high rate of repossessions we were experiencing.

You are thinking correlation and causation are the same thing.

They are not.

[yadayada]

I find it strange you see no correlation between high negative equity and the high rate of repossessions we were experiencing.

As explained above, I do see a correlation. One which makes repossession less likely.

Unemployment and reduction in wages may explain repossession. Negative equity does not - unless those in negative equity have decided to flee to the Canadian tar sands or some other boom jurisdiction beyond the reaches of the banks. I see no evidence of this.

[BelfastVI]

It's a fact once your product ends you move onto lenders SVR.

It's a fact these are much lower than in 2007. It's a fact in some cases 5%+ lower.

You do not need 60% LTV to move onto the SVR.

you do need a low loan to value to be able to avail of the lower interst rates.

Can you give examples of banks standard Varables Rates in NI that are 5% or more lower than they were in 2007

[2buyornot2buy]

you do need a low loan to value to be able to avail of the lower interst rates.

Can you give examples of banks standard Varables Rates in NI that are 5% or more lower than they were in 2007

Sorry it should actually be 4%.

Lloyds, nationwide, C&G, COOP.

So those 2007 customers taking out a product with the banks above would be looking at an SVR of 2.49%.

Average SVR is around 4% now, compared to 7% in 2007.

In 5 years they would have paid minimal equity anyway. They would not have been able to remortgaged onto cheaper rates than current SVRs.

Edited August 18, 2014 by 2buyornot2buy

[yadayada]

So that's it settled.

Your house gets repossessed because you stop paying your mortgage. No other reason.

To repossess a house where the mortgage is being paid satisfactorily would be contrary to the legal agreement made

Negative equity cannot be the reason for repossession.

Now has anyone any plausible explanation for the colossal number of repossessions? Why are people not paying their mortgages in Northern Ireland? Unemployment?

Edited August 18, 2014 by yadayada

[nornironsi]

I would guess that some of the people who have been repossessed have decided to just stop paying the mortgage because they do not see the point in continuing to pay for a vastly inflated mortgage in comparison to the current market valuation of their home, which in some cases may be close to double the current value of the home. You may not like or agree with their reasons for not paying the mortgage which leads to repossession but I would imagine this is happening up and down the country.

I have met people who bought at the 'peak' and who do not want to pay off eg. 200k of a mortgage on a house that's only really worth 95-115k - it's either pay it off and accept you will lose close to 100k, stuck on a SVR with little hope of remortgaging or stop paying, get repossessed and/or bankrupt.

I feel that this is the reason that in reality negative equity has at least in some way had an influence on the amount of repossessions here.

[yadayada]

I would guess that some of the people who have been repossessed have decided to just stop paying the mortgage because they do not see the point in continuing to pay for a vastly inflated mortgage in comparison to the current market valuation of their home, which in some cases may be close to double the current value of the home. You may not like or agree with their reasons for not paying the mortgage which leads to repossession but I would imagine this is happening up and down the country.

I have met people who bought at the 'peak' and who do not want to pay off eg. 200k of a mortgage on a house that's only really worth 95-115k - it's either pay it off and accept you will lose close to 100k, stuck on a SVR with little hope of remortgaging or stop paying, get repossessed and/or bankrupt.

I feel that this is the reason that in reality negative equity has at least in some way had an influence on the amount of repossessions here.

It doesn't matter whether I agree with them or not. What matters is does the bank agree?

If you get your house repossessed you're still liable for the shortfall, and you've nowhere to live - so nuls points I'm afraid. Unless you emigrate and don't come back, or go bust.

They may not see the point in paying for a house worth half what they paid for it. I would imagine they would not see the point in paying for a loan on a house they no longer live in either. Plus rent somewhere else.

Any other ideas?

Edited August 18, 2014 by yadayada

[nornironsi]

That seems to be the crux of the matter. Adults buy property - presumably with professional help from a lawyer and still they have this naive attitude that it's a one way bet. If life is unfair and property values go back down instead of up then like children they don't want to honour their debts.

If I had bought bank shares at 3.50 in 2007 and watched them go down to 50p each in 2008 what would I have had to do? Yes suck it up-- because I am an adult and I bought an equity class which can go up and down -- just like house prices.

I have zero sympathy for anyone who bought at the peak - trying desperately to get on that ship before it sailed to untold wealth. You are an adult therefore you should take adult decisions and live by them.

I understand where you are coming from - though personally I am not so quick to judge people and I certainly do not get any satisfaction seeing other people in trouble.

The fact remains that I would imagine that there are a lot of people deciding that repossession and bankruptcy is a more attractive option than being tied to a vastly overvalued mortgage for the next 20-30 years. I know of at least 2 acquaintances who have gone chosen to do this and negative equity was the main reason they decided to do it. Hense why I do believe that negative equity is having some influence on the amount of repossessions.

[yadayada]

That seems to be the crux of the matter. Adults buy property - presumably with professional help from a lawyer and still they have this naive attitude that it's a one way bet. If life is unfair and property values go back down instead of up then like children they don't want to honour their debts.

If I had bought bank shares at 3.50 in 2007 and watched them go down to 50p each in 2008 what would I have had to do? Yes suck it up-- because I am an adult and I bought an equity class which can go up and down -- just like house prices.

I have zero sympathy for anyone who bought at the peak - trying desperately to get on that ship before it sailed to untold wealth. You are an adult therefore you should take adult decisions and live by them.

.... And your decision is going to stay with you until the loan is paid off, you go bankrupt or you do a runner. There's your choice.

If I borrow money to buy a flash car, I can't just stop making payments because it's got rusty and old. Similarly they'll only take it off me if I stop paying.

[nornironsi]

So their bet on HPI didn't work out so they go bankrupt and leave the taxpayer owned banks to suck up the losses.

I didn't say I agreed with it or expect others especially on this board to be in favour of such actions - just trying to put forward a possible reason why negative equity can have some influence on repossessions here. I have seen it happen.

[little fish]

The initial Task force paper is worth reading - section 29 onwards outlines the reasons they have found (to date) about why repossessions, arrears happen. Negative equity is one of them, as is under employment, unemployment and inflation with general over indebtedness as the main cause of inability to pay. Too simplistic to attribute just one reason, there is often a combination of factors.

Section 50 states that sub prime borrowers are 4 times more likely to default on payments. Although not addressed in the paper, sub prime borrowers are also more likely to have been placed with mortgage lenders who used low rate incentives for 2 years followed by for example LIBOR + 6 (approx) for the remaining term. Where ‘clean’ borrowers on high street SVR after the incentive rate (fix, tracker or discounted) may have benefited from low rates, many of the subprime borrowers will have seen a substantial increase in monthly payments after the incentive period ended. Without the equity needed to re-mortgage they will be stuck paying these higher, often unaffordable rates. These mortgages are also more likely to have been IO and self cert. Triple whammy.

In the case of unemployment SMI covers the vast majority of high street borrowers IO payment. For sub prime mortgage holders SMI at 3.63 is unlikely to even come close to the monthly payment.

For subprime borrowers (who make up the largest group of repossessed mortgages) the lack of HPI and negative equity are a determining factor as to whether they can afford the mortgage or not. It’s not as simple as ‘ no more HPI so I’ll give up my house’ but it is one of a multitude of factors.

It would be interesting to see the % of repossessions which were on IO mortgages as pre repossession protocols advise lenders to change the mortgage to IO for a set time, capitalise arrears and/or extend the term of a mortgage before taking legal action to possess. This does aid a large % of people to avoid repossession, however if the borrower is already on IO there is no point in the lender doing any of these as the payments will stay the same (or go up if arrears are capitalised).

I think these probably make up the majority of repossessions.

I don’t know and can’t find out if BTL mortgage possessions are included in the statistics.

.

http://www.dsdni.gov.uk/rtf-initial-evidence-paper.pdf

More of an explanation than an excuse, however we should remember that the lenders set the criteria for these loans not the borrowers. Then the government bailed them out - with our money.

edited to fix link (hope that's it this time)

Edited August 18, 2014 by little fish