The first set of 2016 figures from the Insolvency Service, since changes in DRO and Bankruptcy thresholds, have been released.
The key points are:
- Numbers of DROs increased by 15.5% from Q3 of 2015
- Bankruptcy orders fell by 4.4% from Q3 of 2015
In addition the number of IVAs remained roughly the same against Q3 of 2015.
The overall number of individual insolvencies increased 3.6% compared to the previous quarter – largely driven by the DRO increase. Against the same Q4 period last year total individual insolvencies fell by 10% and were at their lowest annual level since 2005. This was attributed to a 23% decrease in IVAs.
Given that the new Bankruptcy threshold has increased, by 566%, a seasoned view would prognosticate a drop in insolvency levels as a result.
“With potential effects of Christmas likely to be reflected in 2016 Q1 stats it may be prudent to look beyond Q2 and three of 2016 to see how the new thresholds influence the insolvency landscape.”
Michael Bellingham, Insolvency Practitioner, Harrington Brooks
As the BoE flirts with the possibility of a rate rise the UK economy will see a number of mortgage holders experience an increase in monthly payments – something which the narrative of their term has previously been unfamiliar with.
A report in the Telegraph last year mentioned that 1.8 million homeowners have yet to experience a rate rise. It also suggested that over half of all borrowers believed they would be likely to struggle or fall behind with repayments when the BoE votes to put interest rates up. Should these risks crystallise then it could see 2018 being a crucial year for these households and the economy.