Mortgage holding stocks show signs of pandemic recovery: Justice Department

Mortgage possession stocks are slowly recovering from the impacts of Covid-19, according to the latest mortgage and homeownership data from the Department of Justice (MoJ).

Data from the first quarter of 2022 revealed that due to the pandemic and associated stocks, all mortgage holding stocks were down significantly from the first quarter of 2019.

In the first quarter of 2022, data showed there were 2,890 possession claims, down 53% from the same quarter in 2019, while orders in the first quarter of 2022 fell 47% to 2 293 and mandates fell by 55% to 2,162.

However, compared to the same quarter in 2021, all mortgage stocks are up more than 100%.

The report revealed that compared to the first quarter of 2021, requests for possession of mortgages fell from 735 to 2,890, orders from 145 to 2,293, warrants from 43 to 2,162 and seizures by bailiffs of county increased from 3 to 571.

Following the complete cessation of repossession proceedings from March to September 2020, Financial Conduct Authority (FCA) guidance advised mortgage lenders not to commence or continue repossession proceedings until April 2021.

From April 2020 to March 2021, there were only 10 foreclosures, and only 571 from January to March 2022, down 57% from Q1 2019.

Before the impact of the pandemic, the report explains that the historic decline in the number of stocks in possession of mortgages since 2008 has generally coincided with lower interest rates, a proactive approach by lenders in managing consumers in financial hardship and other interventions, such as the Mortgage Rescue Scheme and the introduction of the Mortgage Pre-Action Protocol.

In addition, the downward trend observed in recent years reflects that observed in the proportion of owner-occupiers.

Elsewhere, the data revealed that all homeownership actions have declined significantly and are yet to recover to pre-pandemic levels.

Compared to the same quarter in 2019, the shares owned by the owners; Claims (19,033), Possession Orders (12,975), Warrants (6,817) and Repossessions (3,763) decreased by 37%, 45%, 57% and 55% respectively.

However, compared to the same quarter in 2021, increases of more than 100% were recorded for all stocks.

Requests for possession increased from 6,376 to 19,033, orders from 5,424 to 12,975, warrants from 2,499 to 6,817 and repossessions from 269 to 3,763.

On a geographical basis, a concentration of complaints was observed in London, with 4,854 complaints from owners and a concentration of orders was observed in the South East region, with 2,745 orders from owners, representing 26% and 21% respective totals from January to March 2022.

Despite this, there has still been a 33% drop (from 7,239 from January to March 2019) for landlord complaints in London and, in the South East region, a 39% drop for landlord orders (from 4,486 from January to March 2019) .

Commenting on the latest data, Founder Ross Boyd said: “Although mortgage and homeownership stocks are down from 2019, before the pandemic, the 100% increase compared to the first quarter of 2021 is a trend worth watching.

“This could be a natural readjustment following the passage of the Coronavirus Act in March 2020. Fortunately, many landlords are benefiting from exceptionally low fixed rates and this will support their ability to maintain their payments. It’s what happens when they come to the end of their fixed rates that matters now.

“Many will suffer a severe rate shock if rates continue to rise, which will be exacerbated if inflation is still well above target.”

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