Second Charge Mortgage Possessions rate remains low

9 August 2013

New figures released today by the Finance & Leasing Association (FLA) show that in Q2 2013, the number of possessions was 183. This was up by 44 compared with Q2 2012, but still represented only 0.06% of the total number of FLA second charge mortgage contracts.

Geraldine Kilkelly, Chief Economist at the FLA, said: “While the volume of repossessions has risen in the second quarter from a very low base in 2012, the possessions rate has actually fallen from 0.08% in Q1 2013 to 0.06% in Q2 2013.”

“FLA members remain committed to helping customers in financial difficulty.  Second charge mortgages will be regulated by the Financial Conduct Authority from April 2014 and must comply with the new Mortgage Directive by 2015.  A sensible transition process will be essential to avoid market disruption.”

Table 1:  The number of actual properties taken into possession by FLA second charge mortgage providers1

  Time period   Number of possessions in the quarter     % change on the same quarter in the  previous year   Annual total   % change on the previous year
  2008 Total   2009 Total   2010 Total   2011 Total   Q1 2012 Q2 2012 Q3 2012 Q4 2012   Q1 2013 Q2 2013                     151 139 163 175   226 183                   -22.6%2 -40.6%2 -25.9%2 -1.7%2   49.7%2 31.7%2     1,612   1,467   864   827         628             -9.0%   -41.1%   -4.3%         -24.1%2    
  1. Possession proceedings arising from FLA members’ second charge mortgage books, which have led to actual possession by the second mortgage provider.
  2. There were changes to the sample in Q1 2012 and Q1 2013 due to changes in FLA membership.  

Notes to Editors

  1. There are breaks in the time series in from Q1 2012 and Q1 2013 onwards because of changes to second-charge mortgage providers in FLA membership. On a same sample basis, the number of repossessions grew in Q2 2013 by 39.7% compared with the same quarter in 2012.
  2. In 2012 FLA members provided approximately £76 billion of new finance to UK businesses and households. Almost £55 billion of this was in the form of consumer credit, 30% of all unsecured lending in the UK. I
  3. In November 2008, the FLA published Good Practice Guidelines for Second Charge Mortgages. The guidelines gave a commitment to help customers in difficulty by setting out the help that is available and committing lenders to consider each case on an individual basis, taking into account customers’ circumstances. The guidelines make clear that every effort will be made to come to an arrangement with customers in difficulty and that repossession is a last resort.
  4. FLA members comply with the Pre Action Protocol introduced in 2008, as well as the additional requirements introduced by the OFT for second-charge lenders in possession cases in 2009.

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