Repossession claims in England and Wales surge to five-year high amid economic pressures

Recent data from the Ministry of Justice has revealed a significant increase in repossession claims across England and Wales, marking the highest level in five years

The rise, driven by both mortgage leaders and landlords, reflects mounting financial strains on households struggling with rising borrowing costs, the Guardian reports.

Rise in mortgage possession claims

In the three months leading up to June, mortgage possession claims by lenders rose by 34% year-on-year, reaching 5,343 cases.

This spike represents the highest volume since early 2019. Landlord possession claims also saw a significant uptick, rising by 9% to 24,495 cases compared to the previous year. While these figures indicate a concerning trend, they still remain below the peak levels seen before the COVID-19 pandemic.

The increase in repossession claims comes despite the Bank of England’s aggressive series of interest rate hikes, implemented in response to the highest inflation rates observed since the early 1980s. Over the past year, the Bank raised its base rate from 0.1% to 5.25%, putting substantial pressure on mortgage borrowers whose repayments escalated sharply.

Possession claims

Although the recent data highlights a challenging environment for homeowners and tenants, possession claims remain considerably lower than the levels witnessed during the aftermath of the 2008 financial crisis. Stringent mortgage regulations were introduced at that time, contributing to a peak of 26,419 possession claims in the second quarter of 2009.

London appeared as a main point for repossession activity, recording the highest rates of both mortgage and private landlord possessions. Boroughs like Newham in East London featured prominently among the top ten areas with the highest claim rates.

Economic recovery and repossession

Among these economic pressures, the Bank of England recently reversed course by cutting its interest rates for the first time since the onset of the COVID-19 pandemic, lowering the base rate to 5%. This move follows a period of inflation easing back to the Bank’s 2% target from a peak of 11.1% in October 2022.

Throughout the pandemic, regulators implemented measures to mitigate possession proceedings, while major banks extended grace periods to assist struggling mortgage holders. The cumulative impact of increased mortgage repayments has strained living standards for many households, contributing to economic contraction in the UK last year as consumer spending waned.

The broader implications are visible in the rise of statutory homelessness assessments, which increased by 10.8% in the first quarter of 2024 compared to the previous year. These assessments, totaling 94,560 cases across England, show the heightened risks faced by households on the brink of losing their homes.