Mortgage arrears and possessions: perspectives from borrowers, lenders and the courts

Authors: Janet Ford, Elaine Kempson, Marilyn Wilson
Funded by: Department of the Environment
Published by: HMSO
Publication date: 1995

In December 1993, half a million households had arrears equivalent to three or more monthly mortgage payments. Possessions currently average around 1,000 a week. Between 1991-1993, for every household losing their home, almost four managed to pay their arrears. Amongst borrowers not in arrears, around 12% nevertheless had difficulties paying their mortgages.

This report indicates that there have been some marked changes in the routes into mortgage arrears, the management of arrears and their outcomes since the late 1980s and early 1990s. Moreover, it shows that arrears accrue in a number of ways: complete cessation of payments; sporadic payments; part-payments or a combination of these.

Lenders and the courts have modified their strategies towards the management of arrears in response to the growth in default and the changing reasons for default. As a result, a larger proportion of borrowers have had an increased chance of remaining as home owners, at least temporarily. There is, however, less certainty that all these borrowers will eventually recover their arrears.

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