Divorce, death and debt are all issues that push homes onto the market in tough times as well as good. However, in the last 18 months, the first factor has played an escalating role in causing homes to land in the hands of the real estate middlemen. Together with relationship counsellors and family lawyers, estate agents reveal an increase in divorce activity levels, whether as a result of stressful family court situations or an agreed split.
During the recession, faced with shrinking budgets, partners looking to separate felt they could either not support themselves independently, or they would not get the optimum price for their personal or business assets. Because of this, apart from a 4.9% rise in 2010, divorce rates continuously fell in the decade leading up to 2011. Couples found it more difficult to break up during the economic problems of the previous years. The number of partners cohabiting in the previous five years, we know from experience, has grown as they think they would not be able to pay for the split.
Budget improvements, as well as soaring house prices, seems to be behind the recent rise in divorce numbers. Getting divorced is more economically practical then it was throughout the main years of the recession. Those selling former matrimonial homes may have adequate equity to put a down payment on a “divorce home”. Also the faster-moving property market in the UK is an indication that sales are less likely to suffer setbacks and more likely to be successful. After all, achieving financial settlement is much more simple if you know that the property that your settlement is dependent on has a high possibility of being sold.
High house prices could permit some couples to financially detach themselves from each other, but can also produce challenges when the former couple want to purchase two new homes in the same area, one each, or one partner wants to keep hold of the family home. For the last scenario, having to sell the main property, even when children are involved, has become almost inescapable. Debt has aggravated the issue. In the past most people had smaller mortgages. The huge level of borrowing on the former matrimonial home often means that one person is unable to meet the big mortgage repayments.
For the economically weaker partner, the latest tightening of mortgage affordability rules has made things worse. Lenders now need to ask more rigorous questions of the borrowers finances and expenses, and they have to assess a borrower’s capability to pay mortgage repayments with increased interest rates. This was launched at the end of April under the Mortgage Market Review. So far, it appears that some lenders will consider maintenance payments when assessing affordability, although some will not.
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