Repossession Time Bomb -- Soon to Go Off

 Interest rates are at their historic low. In fact the Bank of England has never dropped them to 0.5% in its 350 year history.

Although lenders have not dropped their own lending rates to borrowers of housing loans, they are certainly showing resraint to people in financial difficulties and struggling with payments.

Most courts in England and elsewhere in UK have at least one government appointed representative to advice those who are facing imminent repossession that there are other ways to stop the repossession of their house - short of selling. In some cases the lenders are accepting a renegotiated lower payments to give a chance to people to get back on their financial feet.

All these factors mean that more and more people facing hardship are being saved from losing their homes for non payment of their mortgage.

Government's Mortgage Rescue Scheme 
Some observers believe although the above factors are helping the home owners, they are a temporary measure and UK is inching towards a repossession timebomb.

Government has good intentions and seemed to have persuaded the banks to give borrowers a chance rather than throwing the rule book in their face. It's well intentioned mortgage rescue scheme, meant to help hundreds of thousands of borrowes facing repossession has only helped six people in its first 6 months.

Mr Vince Cable of Liberal Democrates says: "The concept is a very good one, I support the principle, but the problem is they will only accept people who are regarded by local councils as homeless."

Which clearly means that people will have to wait for them to be evicted from their homes, or serious close to it, before they can get any help. And it does not stop there. People who have mismanaged their borrowings or finances under scheme's rules can not get help.

Interest rates
Low interest rates will not stay low for ever. Experts warn thet they will start to rise up sooner or later. By next year interet rates will be high enough for ordinary people to start getting anxious again.

Which means that the lower payments the struggling home owners have negotiated with their lenders will have to go up again.

This means that we will see far too many people getting in serious financial difficulties, and many may have to lose their homes to lenders.

We seriously hope that the time bomb never goes off but keeping all the above factors in mind, suspect that it is only a matter of time before it does.