CAB mortgage debt figures show sharp rise

Statistics from the Citizens Advice delivered and DETI-funded Dealing with Debt service have shown a dramatic increase in the amount of mortgage debt handled by CAB money advisers in the last quarter.  The service handled over £2.5 million of mortgage debt over the period October to December 2010, an increase of over 100% on the previous quarter.  In addition, the number of owner-occupiers seeking debt advice from CAB has increased by 10% in the last year. 

The amount of mortgage debt handled by CAB money advisers has risen from £455,000 in 2006 to just over £5 million in 2010 (see table below).  Derek Alcorn, Chief Executive of Citizens Advice said:  "Against this background, it is clear to us that a rise in interest rates could push hundreds of people into difficulties with their mortgages."

Citizens Advice is very concerned about the increases in its mortgage debt figures.  In the current economic climate with many people facing reductions in working hours or losing their jobs, both of which are tightening household incomes, it is predicted that many more people will fall into mortgage arrears. 

In addition, there have been a series of recent changes to the benefits system which have impacted on the number of people contacting CAB about mortgage arrears.  In October 2010 the standard rate of interest used to calculate help for mortgage interest payments through the benefits system was reduced to 3.63%.  This means that many people who rely on this scheme will face significant shortfalls in the amount of benefits help they will now receive.  Citizens Advice has seen a significant number of clients who have been affected by this change and who are worried about the possibility of repossession of their homes.

Clients are also now starting to approach CAB offices about the impact of another change to help with mortgage interest payments for job seekers.  Jobseekers will no longer receive help with their mortgage interest payments if they have been receiving income-based Jobseeker's Allowance for 104 weeks.

In these difficult times with the potential for an interest rate rise there has never been a greater need for the free and confidential services provided by CAB money advisers across Northern Ireland.  In 2009/2010 the Dealing with Debt service helped over 2,500 clients with over £33 million of debt which is an increase of 7% on the previous year. 

To listen to an interview on this issue with Siobhán Harding from Citizens Advice on the BBC Good Morning Ulster programme please click here. 

Table 1. Graph showing the growth in Mortgage Debt handled by the Citizens Advice delivered Dealing With Debt Project over the period 2006 - 2010. © Citizens Advice (NIACAB) 2011