Mortgage Arrears Soar

EuroDebt, a leading debt management provider, is reporting a 109% rise in the number of homeowners signing up to its Debt Management Plans (DMP) on a monthly basis, since September 2007. Added to this, 21.2% of homeowners starting their DMP are already in arrears on their mortgage, which supports the latest figures from the Council of Mortgage Lenders (CML), forecasting 45,000 home possessions and 170,000 households in mortgage arrears of over three months by the end of 2008.

According to EuroDebt Director, Kevin Still, this rise in clients already in mortgage arrears signals just how firm a grip the credit crunch has already had on consumers.  “The number of clients who are homeowners looking for help from debt management has more than doubled in the last 12 months.  And the fact that 21.2% of these are already in arrears is extremely worrying, as paying the mortgage should be the highest priority for homeowners.

“In addition, the average level of unsecured debt for homeowners clients who signed up to our debt management plans in the last 12 months was £31,685.64 - with the highest debt levels appearing around Christmas reaching as much as of £37,087.36.  This is highly indicative of the spiralling debt that families are facing as their cost of living has increased without any significant increase in income.

“A recent report by credit reference agency, Equifax, revealed that 78% of credit active consumers had seen their cost of living increase by up to £250 per month in last 6 months and 30% would only be able to manage their finances for 2 months if they lost their job.  This reinforces just how difficult things are for families at the moment.  And with the availability of new credit severely restricted the old habits of using one credit card to pay off another and remortgaging to pay off debts simply isn’t an option for many individuals.

“Clearly many people are struggling under the current financial pressures, making it more important than ever that individuals take stock of their situation before it reaches a critical point. Falling behind on mortgage payments is a difficult point to come back from – although we have considerable success in helping clients who are at this stage.  But much better is to start to address financial difficulties when they first become apparent. With some careful planning it is possible to take control of the monthly budget and get out of financial trouble.”