Cut in number of repossessions forecast

Leading trade body for the mortgage industry, the Council of Mortgage Lenders (CML) has reduced the number of repossessions forecast for the year in total to 48,000.

Last year the CML originally predicted that 75,000 mortgage borrowers would lose their homes in 2009. That figure was brought down to 65,000 in June and has now been cut dramatically.

The welcome news is attributed to a combination of mortgage lenders practicing ‘forbearance’, exercising patience with struggling mortgage borrowers, government measures and the continued low interest rate environment, which is keeping mortgages affordable for most homeowners.

The latest CML data shows that the number and proportion of mortgages in arrears both fell in the third quarter of the year. At the end of September 194,600 mortgages, 1.77% of the total, were in arrears of 2.5% or more of the outstanding mortgage balance. This compares with 204,200 cases (1.86% of all mortgages) at the end of June.

CML director general Michael Coogan said:

"We are glad to have been wrong on our previous forecast for mortgage repossessions this year. 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. "

"Borrowers should take heart from the latest findings, as they reinforce the fact that lenders really do want to keep people in their homes - and are doing so."

Mark Blackwell, MD of Xit2, the property and mortgage outsourcing specialist, said:

“If the repossessions process has been genuinely well-managed over 2009 then this really is good news. As far back as February we were saying the CML’s 2009 repossession forecasts were at least 10,000 too high. The statistics were too pessimistic and it’s no surprise they have had to be revised down again.

"Our experience of the arrears and repossession markets suggested the stats didn’t reflect the lengths lenders were going to to explore workable options for addressing borrowers’ payment problems - even after obtaining court orders - right up to the point of possession. Possession is now the last resort and is only occurring when all other reasonable attempts to resolve a case of mortgage arrears have failed.

"But if lenders are just delaying the inevitable, we’re effectively sweeping the problem under the carpet until next year. And all the economic indicators suggest we’re in for a tough 2010, so we shouldn’t imagine we’re out of the woods yet.”

Kay Boycott, director of policy and campaigns for housing charity Shelter, said:

“The combination of low interest rates and government initiatives have clearly helped stabilise the rising tide of repossessions.

“But this is no time for complacency or congratulations as this is still the highest level of repossessions we have seen for over a decade.

“Access to advice and support schemes have been crucial and will continue to be crucial in helping people keep their homes. With over 200,000 homeowners saved from repossession by the Support for Mortgage Interest scheme (SMI) we would have undoubtedly seen far more repossessions if this help had not been available.

“Government must promise to keep Support for Mortgage Interest (SMI) at the current levels of interest and eligibility in the Pre Budget Report and commit more money in order to keep vital advice services going through this continued crisis.”