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Wednesday 1 October 2014

Warning over 'mortgage prisoners'

Published 15/02/2013 | 13:46

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Repossession of houses may sort out the mortgage mess

The number of families seeking help for housing repossessions in Northern Ireland has reached a critical point, it was revealed.

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More support should be introduced to help struggling "mortgage prisoners" who borrowed at the peak of the boom and are unable to sell their properties because of negative equity, the Housing Rights Service said. The organisation is dealing with around 150 new cases every month.

Interest free loans or grants or full-blown mortgage rescue schemes must be brought in to relieve the pressure, the advice group added.

Director Janet Hunter said: "Mortgage repossession activity in Northern Ireland has reached a critical point. We are experiencing sustained demand for our mortgage debt advice service. We are struggling to cope with this and unfortunately we cannot see the situation improving for some considerable time."

The charity provides mortgage debt advice on behalf of the Government. There has been a 35% increase in the number of struggling homeowners using the service in one year. In 2011/12 the service dealt with almost 40,000 housing issues.

The threat was underlined by a 15% increase in the number of actions for repossession taken compared to the same time last year, figures from the Northern Ireland Courts and Tribunals Service showed.

By contrast, in England and Wales mortgage repossession action dropped to a five-year low, with house price recovery reported in some areas. In Northern Ireland the house price fall resulted in the region becoming the worst in the UK for negative equity, with over a third of loans taken out since 2005 affected. In 2007 prices peaked at an average of £234,000 - by last year this had dropped to £139,000.

A spokeswoman for the advice service said: "As a consequence, large numbers of local working families who bought at the peak of the market are now mortgage prisoners, struggling to meet their mortgage commitment and unable to sell." She said the forced sale of repossessed properties could further depress house prices and hinder housing market recovery.

Ms Hunter said: "Tackling mortgage debt is complex and requires a range of interventions from Government, lenders and advice providers. A co-ordinated effort is needed.

"We are pleased that the Minister for Social Development (Nelson McCausland) is equally concerned and, as part of his Housing Strategy, has made a commitment to supporting those experiencing difficulties in sustaining their home. We look forward to further assisting the minister in his efforts to prevent struggling homeowners becoming homeless."

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