Fewer Britons expected to lose homes this year

Published 13th Nov 2009

The number of repossessions forecast for this year has been reduced to 48,000 by the Council of Mortgage Lenders (CML), which last year predicted that 75,000 people would lose their homes in 2009.

In the last three months, there have been 11,700 repossessions, up slightly from 11,400 in the second three months of the year, but 8 per cent lower than between January and March. However, the figure is still 5 per cent higher than for the same period last year.

In June, the CML revised its forecast for the year down to 65,000 repossessions – a figure last seen in 1992 during the previous UK recession.

Figures from the Ministry of Justice released today also show that the number of repossessions dropped, down by 7 per cent in the three months to October to 24,337, compared with the previous quarter and fell 37 per cent on the comparable three months of 2008.

Michael Coogan, the director general of the CML, said: "Low interest rates and lenders' forbearance policies have helped to cushion many households facing financial problems. And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time.”

However, the CML forecast that the number of repossessions in 2010 would total about 53,000, which is about 0.48 per cent of all mortgages. Mr Coogan added: “There is a risk that public spending cuts and higher taxes could choke off recovery.”

The Government has launched several initiatives to help struggling homeowners, including the Mortgage Rescue Scheme, under which people can sell some or all of their home to a social landlord and rent it back, as well as the Homeowner Mortgage Support scheme, which enables people to defer paying interest on up to 70 per cent of their mortgage for up to two years.

It also introduced rules in November last year, allowing courts to grant a repossession order only if all alternative measures to keep people in their homes had failed.

The Mortgage Rescue Scheme was criticised earlier this year when it was revealed that it had helped only 14 families by the end of June.

Howard Archer, chief UK and European economist of IHS Global Insight, said that the low number of repossession properties coming to the market, compared with the last recession, could be contributing to the shortage of property that has recently bolstered property prices.

House prices rose by 1.2 per cent in September compared to August, according to Department of Communities and Local Government - the sixth increase in a row.

Buy-to-let lending is also beginning to show signs of recovery, according to CML data, climbing 10 per cent to £2.1 billion in the third quarter.

Many buy-to-let investors struggled to let inner city apartments in cities such as Birmingham and Manchester last year, causing the prices of new-build flats to plummet.

Mr Coogan said: "At this stage, the recovery is modest — but the figures show that buy-to-let is here to stay. Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome.”

Source: ' Times '

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