A new EU financial directive could trigger a rapid increase in property repossessions.
Currently UK homeowners have the cushion of a period of 6 months in arrears before mortgage companies are allowed to begin eviction proceedings and repossess the property, but a new EU directive could be set to slash this period in half to just 90 days.
An obscure clause in the European Mortgage Directive states that all mortgages that are more than 90 days in arrears must be declared as default, and a repossession order issued by the mortgage company.
The British Bankers Association has already declared this 90 day clause one of its “top concerns”.
The EU believes that the new directive will reduce the risks associated with mortgage lending, and makes banks safer. But a spokesperson from the British Bankers Association argued, “…the reduction in the maximum number of days at which default occurs is not reflective of the underlying risk fundamentals.”.
It is feared that if this new draft directive is passed in its current form, it will cause a massive increase in home repossessions in the UK, with many home owners already in the 3 to 6 month period of arrears.
“Were this European directive to become law, at a stroke, it would pull the rug from under many thousands of Britons who are currently struggling to keep up with their mortgage repayments.” Michael Atkinson, director of the mortgage brokers Summit Capital Mortgages