Savings crisis could lead to increased repossessions

Nearly half (46%) of the UK population is now unable to save anything from monthly incomes, according to research from property purchasing company, A Quick Sale.

This is compared to 34% just two years ago (2005). The recent interest rate rise is likely to see the number of people saving regularly decrease even further as people’s monthly mortgage repayments increase. Someone with a £100,000 mortgage who is coming off a two year fixed rate deal in the next few months will face an increase of around £100 in their monthly repayments.

Richard Watters, managing director of A Quick Sale is warning that this trend could lead to an increase in home repossessions, as fewer and fewer people have money put aside to fall back on should they lose their jobs or experience a change in personal circumstances.

Richard said: “Our research has found that only one in ten people (12%) have enough savings to cover mortgage payments and living expenses should they lose their jobs, while only 13% have a mortgage protection policy that will meet their monthly payments. People who have savings seem to be having to draw on them to keep up with the cost of living and are cutting back on what they deem to be the non-essentials such as mortgage protection policies.”

Of the lucky few that can afford to save, nearly a quarter (23%) are concerned that they aren’t able to save enough to manage should an emergency or an unexpected big expense arise. In comparison to this, nearly a fifth (19%) don’t worry about saving as any large costs will be put straight on to a credit card.

Richard continued: “An increasing number of people (19%) are relying on credit cards and loans to meet unexpected costs that arise, which means that debt is also increasing. Recent figures have shown British personal debt has reached an all time high of £1.38 trillion - twice the level of Continental Europe.

“Back in February the Royal Institute of Chartered Surveyors was predicting that over 50 families will lose their homes every day in the UK during 2007 because they can no longer maintain their debt repayments. Increasing mortgage payments, fewer savings and rising debt is unfortunately a recipe for this to increase even further, and our research has shown that repossession is a major concern for around 7.8million people.

“Our advice to people in this situation is to seek professional advice sooner rather than later as this will help them avoid getting to the stage where they are missing mortgage payments. For many people on the verge of arrears, re-assessing finances and looking at monthly outgoings can help to get them back on track.”

However, for people that do find themselves several months in arrears, it doesn’t mean that they will lose their house. Although selling your home to raise enough capital to pay off debts is a last resort, property purchase companies such as A Quick Sale can provide tailored solutions to people that enable them to stay in their home, avoid repossession and the associated credit blacklisting.

The A Quick Sale research also found that:

Almost a third (29%) of people used to save, but don’t anymore due to increased living costs

Over half (51%) of 25-34 year olds are unable to save anything from their monthly income

Only 6% of people in London have a mortgage protection policy to guard against redundancy or ill health compared with 18% in the North East and North West

People in the North West are the most savvy savers with 17% of people having enough savings to cover six months of mortgage payments and living expenses.

Sell and rent back

For people in financial difficulties, selling and renting back their home allows them to release equity quickly enabling them to get back on their feet. A Quick Sale can offer a tailored solution to help homeowners continue living in their home by remaining as tenants and paying an affordable rent. In some circumstances they are also able to offer a rent-free period, giving people time and breathing space to clear other debts. In addition to renting back their home, an option to buy back the house for an agreed price within a certain time period – typically up to two years – is possible.

Customer is king
A Quick Sale is also the first and only company in the property purchasing sector to introduce a Customer Charter. This states that A Quick Sale promises to provide:

A free assessment of the customer’s property value

A guaranteed offer on the property

A full explanation of how the offer has been calculated

To pay all legal fees for the sale of a property

Never to charge customers for any part of the A Quick Sale Service

To complete the purchase of a property within one month6. If this is not achieved the customer will be paid £250 for each week the house sale is delayed

Richard Watters concluded: “At A Quick Sale we operate to very high ethical standards. We would like to see this approach adopted across the industry and, as such, are campaigning for regulation to be introduced to ensure that customers, who are often already in financial difficulty, aren’t exploited by any unethical practices, which may leave them in an even worse situation.”

For further information, visit a-quick-sale.co.uk.