Jason Richardson, Real Estate lawyer at Bircham Dyson Bell believes that the recession is keeping home owners afloat with news last week from Savills that the banks have £250 million in 'non-prime' debt.
The definition of 'non-prime' is any property affected adversley by the recession in terms of value - essentially the 'ordinary' homes of the vast majority, as opposed to large multi-million pound homes in city centre London which hold their value.
"Because interest rates are so low, the banks continue to underwrite the bad debts that may otherwise be written off, keeping people in their homes - but it remains to be seen what will happen if the interest rates start to rise," explains Jason Richardson.
"The recession has essentially created a two year cushion for those who, if interest rates rise, may struggle to pay their mortgages. It's a false sense of security - and it remains to be seen how the banks will work with home owners who are struggling.
"Add to that the fact that many of our banks are now tax payer owned and are working much more responsibly than ever before - we can only hope that this rubs off on their attitude to those who may need help when interest rates start to rise."
A mortgage pre-action protocol introduced a year ago has reduced the number of repossessions and a consultation paper is due to be published by the end of the year to tighten up the law so lenders cannot sell the home a borrower lives in without due court process.
"Of course, for UK and foreign property investors the non-prime property market will reap huge rewards - there will be hidden gems on the market at values lower than we've seen in a long time. If you have the money to buy - now's the time to do it."
"The two year 'hiatus' in interest rate rises will have saved many home owners from being forced to sell, so it's safe to say that interest rates remain of key importance to recovery. With home owners being encouraged to reduce debt and save, it may be that the UK will follow a more European attitude towards property with people preferring to rent rather than buy property".
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