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Repossessions to Increase If New EU Directive Is Passed (26 January 2012)

Date: 26/01/2012

Duncan Lewis, Legal News Solicitors, Repossessions to Increase If New EU Directive Is Passed

Homeowners could face increasing mortgage costs if a new EU directive is pushed through by the European Parliament. British mortgage owners will be required to begin repossession proceedings once they have fallen behind on the three months of payments, as opposed to six, with thousands of homeowners facing losing their properties if the EU directive takes effect, it has been reported.

With the chance of default proving much greater, lending money to prospective homeowners could potentially cost financial institutions between 15 and 20 per cent more. The cost is likely to affect homeowners, or lenders will be forced to restrict prospective homeowners’ accessibility to mortgages. The change is being introduced by the EU to ensure that the risk of suffering from another financial crisis is reduced. Financial institutions will be granted less time in which to restructure payments to aid homeowners in avoiding defaulting. The reforms, which are currently under consultation by the European Parliament, may take effect next year. At present, the majority of the 27 EU member states classify homeowners as being ‘in default’ upon falling behind on three months’ repayments.

Michael Atkinson, the director of Summit Capital Mortgages, a mortgage broker, claimed that, if the European directive were to become law, U.K. mortgage lenders would struggle to grant prospective borrowers the funds that they required. In Britain, around 1.2 per cent of the 13.6 million mortgages granted by lenders currently stand in arrears, with homeowners failing to meet the cost of their mortgage repayments.

Duncan Lewis’ conveyancing solicitors are dedicated to providing homeowners with legal advice on the repossessions process.