Repossessions have slumped by 26% since the Bank of England began raising interest rates last year, data from the House Buyer Bureau shows, bucking expectations that more people would lose their homes as mortgage payments lifted.     

In the eight months since the central bank began its series of rate hikes last December, there have been 1,285 repossessions across England and Wales, compared to 1,739 repossessions in the eights running up to the end of last year.  

Rates have jumped to 3% from 0.10% last November as the Bank bids to combat rising inflation at 11.1%, sparked by food and energy hikes.  

The study by the quick-buy housing specialist says that the biggest fall in repossessions are in the East of England where a pre-rates increase total of 70 repossessions has dropped to just 19, a 73% fall.   

In the South West, 114 repossessions in the eight months before the rates increase have fallen to just 73 in the months since, a 36% drop. And in the North West, a total of 403 repossessions has dropped by 32.5% to 272.   

The fall in repossessions has also been significant in the North East, down 30.8%, the South East, 28.2% lower, London, a 25.7% reduction, and the West Midlands, cut by 22.7%.  

Meanwhile, the drop has been smaller in Yorkshire & Humber, down 2%, Wales 6.4% lower, and the East Midlands, a 9.3% reduction.  

However, the report points out that as a result of rate hikes, the number of monthly mortgage approvals in the UK since last December has fallen by 19.2%, as borrowing becomes more expensive “and prospective homebuyers decide to postpone their ambitions until a more stable time”.  

In addition to this, next year will see overall mortgage lending drop by 15%, according to UK Finance in its forecast for 2023 and 2024.

House Buyer Bureau managing director Chris Hodgkinson says: “Interest rate increases are never welcome news for homeowners with mortgages, so it’s going to be a relief for many to see that repossessions have not become more frequent as a result.  

“But this sharp decrease in repossessions doesn’t necessarily mean that homeowners are having no problem with fulfilling their mortgage.   

“Instead, a key factor will be the fact that lenders are being advised to avoid rash repossessions in the case of payment shortfalls.   

“They are, for example, being advised to allow homeowners to stay in possession of the property for a reasonable time to enable them to sell the property rather than have it taken away.  

“So, while this drop in repossessions is preferable to a rise, it doesn’t necessarily mean that people aren’t struggling with payments and we could well see a spike in repossessions over the coming months, as the patience of lenders wears thin when it comes to those unable to fulfil their repayment obligations.”