An analysis of court ordered repossessions in the first half of 2012 by e.surv chartered surveyors, found there were 1.8 repossessions per 1,000 households in the north, 32% more than the south, which saw 1.4 repossessions per 1,000 households.
The research found the gap has widened from a 7% difference in the middle of 2006 to 32% as of the beginning of August this year.
The north west, the M62 corridor and industrial Yorkshire are the regions where repossessions are highest. It says that the north has had to shoulder a larger burden of the public sector cuts, which has pushed unemployment up well above the national average of 7.8% in some northern areas, particularly inner city areas which have been traditionally dependent on local council employment. As a result, more borrowers in the north have failed to keep up with their mortgage repayments.
Northern towns dominate the list of places with the highest proportion of repossessions. Chester tops the list, with 4.9 per 1,000 households, over three times higher than the UK average of 1.6 per 1,000. Blackpool with 2.6 and Bradford with 2.5 complete the top three. Of the top 20 postcodes where repossessions are highest, 15 are in the north.
Conversely, southern towns almost exclusively populate the list of areas with the lowest proportion of repossessions. Just three northern postcodes appear in the bottom 20 areas for repossessions.
‘The recession has hit the north much harder than the south. Monthly budgets have been ransacked since the financial crisis, which is making it harder for borrowers to keep up with mortgage repayments. Personal finances have been caught in the grip of increasing energy prices, a sharp drop in wages in real terms, and record low savings rates. And the squeeze has been tightening. Although all these problems are on a national scale, they are accentuated in the north,’ said Richard Sexton, director of e.surv chartered surveyors.
Bucking the north south trend are parts of East London and Essex. Despite being affluent areas when judged by national standards, the high population density of both areas means they contain enclaves of low affluence and high unemployment. Repossessions in these areas are high and push up the rate for the overall area.
Romford in Essex, has 2.5 repossessions per 1,000 households, the fourth highest proportion of repossessions in the UK and 44% above the national average, despite its close proximity to wealthy parts of London.
‘It’s not a completely consistent north-south divide and there are some anomalies to the trend. Particularly in densely populated urban areas, with bigger variations in rich and poor, repossessions levels can vary dramatically within a confined geographically space. There are pockets of very poor borrowers living near very affluent areas, especially in areas like Greater London,’ explained Sexton.
On a national basis, repossessions in the first half of this year fell 16% on an annual basis. The average number of repossessions per 1,000 households fell from 1.9 in the first half of 2011 to 1.6 in the equivalent period of this year. This was despite cases of serious mortgage arrears rising to their highest since the year 2000.
Sexton said that it is good news that nationally repossessions are falling. ‘Banks are doing the best they can to keep people in their homes. As a proportion of overall mortgages, there are more borrowers in serious long term arrears than at any point in history, yet repossessions levels are much lower than they were in the middle of 2008 when we entered the crux of the credit crunch,’ he said.
‘The only explanation is banks are being more tolerant of borrowers in arrears than ever before. Why? Well, some major lenders we are now part government owned, so they may feel they have a duty to keep as many people in their homes as possible, but more generally the lending community wants to be seen to be acting responsibly and with increased sensitivity to the plight of struggling borrowers. If they can keep people in a home, they will try their best to do so,’ he added.
The research also shows that despite a sharp increase in the number of mortgages in arrears since the middle of 2008, there are currently 66,700 more compared to the first half of 2008, repossessions have fallen 61% over the same period.
The number of mortgages in serious arrears, that is 10% or more of the balance, has increased by 47% since the first half of 2008 to 28,600, the highest since 2000, and the highest ever as a proportion of the total number of outstanding mortgages.
While this only accounts for a quarter of a per cent of all outstanding mortgages, it still means lenders are exposed to £275 billion of mortgages in serious long term arrears.
‘The apparent contradiction between a fall in repossessions and an increase in arrears can’t last forever. Lenders should be commended for their determination to keep people in their homes, but there is a bigger picture to think about,’ said Sexton.
‘Presumably they are taking a view that the economy will improve in the long term and put more borrowers back into the black, so they are willing to go on supporting struggling borrowers. But if the government ultimately fails to concoct a recipe for economic growth, we could well see repossessions rise further down the line, the clock is ticking in both regards,’ he added.
