Official forecasts for the number of repossessions this year may be reduced this summer, down from the initial prediction of 45,000. The Government was, naturally, quick to take credit.
Although the number of mortgage borrowers in the most serious arrears has increased, overall figures are unchanged from a year ago.
The Council of Mortgage Lenders says that the number of repossessions in the first quarter of 2012 was 9,600, the same as in the first quarter of 2011, breaking the recent trend of year-on-year increases in repossessions.
Repossessions in the first quarter were higher than the 8,700 that took place in the fourth quarter of 2011, but the CML says his represents a normal seasonal pattern. Overall, the repossessions landscape appears stable for the time being.
The CML also says that through the first quarter of the year, there was a modest improvement in the total number of mortgages in arrears. The number of mortgages with arrears of 2.5% or more of the outstanding balance fell to 157,800 (1.4% of all loans), down from 160,300 at the end of December 2011 and 170,500 at the end of the first quarter of 2011.Within the total number of arrears cases, the largest improvements were in the middle arrears bands. Year on year, the number of loans in the 5–7.5% arrears band fell by 12%, and reached its lowest number since the fourth quarter of 2008, while the number in the 7.5–10% band fell by 13% to its lowest since the third quarter of 2008.
The only arrears band to show a year-on-year increase was the group of loans with arrears of 10% and over, with the 28,000 loans in this category, 300 higher than a year earlier, representing the highest number since June 2000.The 45,000 central forecast for repossessions in 2012 may be revised down when the CML publishes revised housing market forecasts later in the summer.
However, the CML notes that continuing pressures on household finances, changes to welfare benefits and an upward drift in mortgage rates all have the potential to disrupt the current stable picture.
Commentators said that the time might come when lenders had to stop showing generous forbearance to borrowers falling behind with their mortgage payments.Last year the CML forecast 40,000 repossessions, but in the event there were 36,200 – the lowest annual total since 2007.
Housing minister Grant Shapps said that the Government’s commitment to tackling the country’s deficit was keeping interest rates low, which in turn was holding down repossessions.
He said: “No family that has worked hard to buy their own home should be left feeling like repossession is the only option – not when there is help and support on offer to ensure that it is only ever the last resort.
“Thanks to our work to tackle the deficit, we’ve managed to keep interest rates at record lows, keeping pressure off hard working home-owners, and meaning we’re nowhere near the levels predicted only three years ago.
”He was referring to a report by Professor John Muellbaur who three years ago forecast that repossessions could hit 60,000 a year.
David Sansome, Managing Director at Sansome & George said: “The fact that repossession numbers are below predicted levels is clearly good news and a clear sign that continuing low interest rates are helping many to manage despite challenging financial circumstances. In the area covered by Sansome & George we are fortunate to enjoy good levels of employment although there will, of course, be those who find themselves falling on “hard times”.
Crucial for those in financially difficult situations is to not “bury one’s head in the sand” and take professional advice at the earliest opportunity. Options of selling, renting, re-mortgaging etc are all possibilities and talking to an existing lender may result in an agreed plan that will stave off any immediate threat of repossession.
At Sansome & George our sales, lettings and mortgage advisers are here to help.”
