Between July and September this year, the number of bank repossessions on mortgaged homes rose by 15 per cent compared to the previous three months in the UK. The main reason is that the interest rates of mortgages have risen sharply, and the cost-of-living crisis has also had a negative impact on the budget of individual households.

In the third quarter of 2022, a total of 700 mortgaged homes were repossessed by banks and credit agencies, according to data released by UK Finance. During the process, the bank takes ownership of properties whose owners have defaulted on their mortgage repayments. These properties are usually sold by the bank later.

Besides the privately used homes, the number of repossessed „buy-to-let” properties has also increased. These are typically bought for investment purposes, meaning the owner does not live in them but rents them out to tenants. Repossession of those properties rose by 11 per cent to 390 between July and September. These properties come under a different category in terms of mortgages.

The main reason for the increase in repossessions is that interest rates on mortgages have risen significantly in the recent period, leading to increased monthly installments that British home owners could no longer afford.

„If mortgage rates continue to rise, foreclosures will inevitably increase,” especially in the current climate where, in addition to rising long-term interest rates and repayments, Britons are facing increasingly hefty energy bills and all-around inflation, affecting the cost of basic necessities, such as food and clothing.”

Samuel Mather-Holgate, a financial adviser at Mather and Murray Financial, said. On 1 May of this year, the average two-year fixed interest rate among homeowners was 2.57 percent, but on 1 October it was already 5.43 percent. This means that on a £200,000 mortgage, the interest rate hikes will increase monthly repayments by £316, from £904 to £1,220, reports the This is Money news portal.

Research from Citizens Advice has revealed that more than a quarter of mortgage holders would not be able to afford their monthly repayments if they increased by as much as £100 a month.