A study of data from over 12,500 households in mortgage arrears that more than half of those borrowers, who had received a home visit about their default, paid off some or all their arrears during the second quarter of 2011.
The study by Ascent, the field agency business of law firm Irwin Mitchell, also showed that the amount of these borrowers paying off their arrears had increased 7% compared to the same quarter in 2010. It had also shot up by 43% compared to two years ago.
Irwin Mitchell’s Domestic Arrears Report also showed that borrowers are beginning to pay back much larger chunks of their arrears.
Out of the 2,476 home owners who had received a visit or call about their arrears during the second quarter of this year, 37% paid an amount back equivalent to more than one month’s mortgage. This was twice as high as the proportion who did so two years ago.
Niall Gilhooley, of Ascent, said: “Household incomes are under significant pressure from all sides but it appears people are determined to do all they can to work with their lender in order to safeguard their home.”
Irwin Mitchell’s report follows several others which paint a picture of consumers tightening their belts and reducing their borrowing, while demand to take out new loans is still falling.
The British Banking Association’s (BBA) latest monthly lending statistics showed that gross mortgage lending reached £7.6bn - 8% lower than in July 2010.
BBA statistics director, David Dooks said: “The high street banks have provided almost three-quarters of all new mortgage lending during the last two years when the mortgage market has been very subdued.”
“Demand for borrowing from both households and companies continues to be weak reflecting the slow growth in the economy.”
Dooks added that retail sales continue to grow very slowly and consequent demand from consumers for unsecured borrowing remains weak.
He said: “Repayment of loan and overdraft borrowing continues to outweigh new lending.”
Insolvency trade body has also issued a study showing that nearly one in four (38%) of the British public is trying to spend less on their holiday this year. Of those saving money, 59% are choosing to holiday at home instead of abroad, according to a recent poll by R3, the insolvency trade body.
R3 president Frances Coulson said: “It’s unsurprising that people are choosing to stay at home instead of holidaying abroad to cut down on their expenditure, given that we have seen consumers’ disposable income become squeezed as a result of inflationary pressures.”