Thu 6th Dec, 2007
Repossession Figures Suggest Renovation not Relocation
Many people are looking at the increase in repossessions in 2007, and considering renovation over relocation. They are choosing to apply for secured loans to renovate and upgrade their home, instead of moving. This may have the desired effect of reducing the national inflation rate.
The government has been working to reduce the inflation rate, hiking interest rates five times in the last year, and promising at least one more interest rate hike within the next six months. This has many homeowners scrambling to make payments on mortgages. Many people have seen their monthly payments increase one or two hundred pounds, even though they have paid down their mortgages.
The Council of Mortgage Lenders reports that repossessions increased by 30 per cent in the first half of 2006, highlighting to first time buyers the potential pitfalls of taking on too large a home loan. Unofficial figures show that they also increased dramatically in the first quarter of 2007.
The cost of moving, upgrading a new home, and a mortgage, is making it impossible for many homeowners’ to move, despite the inflated price of their current home. Many are opting for a second mortgage, or a secured loan, and renovating, hoping that the equity in their property will hold long enough that it will become affordable to move up into a nicer home, or a better neighbourhood.