The number of repossessions in the first quarter of 2011 rose for the first time in a year, and were up 17% to 9,613.
Meanwhile, the mortgage drought continues.
The statistic on possessions is in the Financial Services Authority mortgage lending data covering the first three months of this year and published yesterday.
The data paints a picture of a housing market that remains stubbornly at a standstill, with new advances totalling £33bn, 10% lower than in the last quarter of last year although 3% up on the first quarter of 2010.
But house purchase mortgages accounted for just 54% – a reduced share – of new mortgages.
Only 2% of all new mortgages were given with a loan to value above 90%.
Borrowers with impaired credit histories struggled to get anywhere at all with lenders, receiving just 0.3% of all loans.
While possessions were up, the number of new arrears in the first quarter was down 8% on the last quarter of 2010. The total number of arrears cases stands at 337,000, 2% down on the last quarter of 2010 and 7% down on quarter one 2010.
David Brown, commercial director of LSL Property Services, the parent company of Your Move and Reeds Rains estate agency chains, said: “Transactions are currently running at less than 61% of the long-term average, which is an indication of just how quiet the housing market currently is.
“According to our research, the greatest fall in transactions has been for flats, which are the property type most frequently purchased by first-time buyers.
“They’re being hardest hit by the mortgage drought. Despite the number of mortgages currently offering repayment rates below 3%, lenders are still exercising caution when giving mortgages to those with limited deposits.
“The greatest fall in transactions appears to be in the South-East and London, where property prices have grown by 2.6% and 7.4% respectively in the last year, while northern England, where prices have fallen by 2.6%, is the only region to see growth in transactions.
“These transaction figures may be the first sign that the regional house price picture in the UK may be about to reverse as prices in the South-East are reaching a peak.”
Meanwhile, the National Association of Estate Agents issued an uncharacteristically gloomy report which referred to ‘stagnation’ in the housing market.
Wendy Evans-Scott, President of the NAEA, said: “Our members have likened the housing market to an obstacle course, with many falling at the first hurdle as the finance required to buy just isn’t available.
“The banks must find a balance between the loose lending of the boom and the rigidity of the current lending rules. House buyers need the Government to act in a sensible and proportionate way by encouraging the banks to offer adequate financial help to buyers.”
In 2006, there were 1.66m housing transactions. Last year, there were 886,000. This year, the Council of Mortgage Lenders has lowered its prediction to 840,000.
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Comments
Whoah! 17% is way too much! Can you tell me more about this?
@Watching,
Fantastic post.
Bravo!
@ Industry observer and Bleep and Booster
a great discussion and true. A refreshing Change
@Watching
Well done on one of the most accurate (if lengthy!!) summaries of the true position I have ever seen posted on any subject.
The really sad thing is this can only get worse as the bigger fish continue on their acquisitional ways.
The banks are screwing prices to suppliers down so hard to satisfy TCF they are in danger of no one wanting their work soon. They need the best to work for them, that costs realistic fees or you get rubbish service, rubbish prices and thast not TCF.
In my view most RePo's sold at auction do not have a relation with 'true' values - after exposure to private treaty offers for an unreasonably short time to comply with their legal responsibilities - the reserve is usually set at a figure that just covers the lenders mortgage and costs. Buyers at these events know this and are there to get a 'bargain'.
I wasn't going to reply to the FTB, he obviously has no grasp of estate agency from the inside, only seeing it from a buyers prospective, but I couldn’t resist.
Book 2 valuations, a good independent and any corporate you like. Then assess the effect.
Corporate Managers insist they provide more this, more that and more of the other for your bucks (fee) then ask you to sign up for between 1.75% and 2% of your sale price on a minimum 3 month contract, longer if they can get it. They don’t fully justify their fees, but the truth is as follows:
They need greater fees to pay for all the ‘bling’ in their office, their underpaid underlings, their lovely leased BMW and their cut of the commission. Then they have other things to consider, such as their poncy Area Manager and his even bigger BMW and expense account, then there is the Area Managers Regional Manager with his ‘uber-ego’ and even bigger BMW, expense account, secretary and his Regional Office space. Then beyond this there is the Regional Managers Sales Director in his ivory tower at Head Office, now we are into the realms of Jags and Mercs, even bigger expense accounts, and lots of departments in a fantastic building employing graduates to play with enterprises such as ‘marketing’ (what tout letters to do next), Legal (fending off all the complaints), FS (selling mortgages to those who unwittingly hand over their details while house hunting), Conveyance (similar department to FS), accounts ( to avoid tax, avoid going bust and make sure the Directors are paid well). And in some corporates, Franchising and Acquisitions department (looking for new business on every high street in the land to grow the empire and further line the pockets of the Directors). Not to mention the training department (this is where they train the underpaid underlings to deliver the 'sales patter' to buyers, they get disilusioned, leave the firm, then a new tranche of underlings need to be trained, it's perpetual). None of this has anything to do with the front line service at valuation of your house or selling your house.
So how do corporates get any business? Over value is the answer. They have 3 months to get the vendors price down, don’t they?.. Once the Managers name is muddy enough he gets sacked or moves company or gets promoted to Area Manager.
(Some see the light and become independent).
What do corporates really do with instructions once gained? A: Pop it on rightmove and in the local press, the same as your local independent would have done. Nothing different, no better, but in most instances at hugely greater expense.
Independent Agent is generally living and working in his own community, building a reputation over 10/20/30/40 years, often with qualifications, often with some years of corporate experience under his/her belt, knows his area, knows his/her job inside and out and helps not hinders anyone who he/she encounters with courtesy, empathy and good advice.
Economies of scale: the independent pays more for internet, newspaper, printing, staff, etc, etc, but still will normally provide more experience and better service at less cost to the Vendor. What the corporates save in cost they pay to their Directors in salary/bonus, no saving or benefit for Vendor. As for shareholders? No dividends lately, we are in a recession, don’t you know?
As a buyer, you and your buying suporters will not be interested in the effect of independent over corporate, you don't pay any fees to anyone, it's a free service to you.
Your opinion to me is akin to taking scuba diving lessons in a quarry, I get your intention, but don't see the point, may as well learn scuba in sunny warm seas at the same cost.
You still don't get what Bleep n booster was saying.
Simples, here the lesson endeth...
Spot on FTB Dan, to differentiate between corporates and 'standard' EAs is baffling.
Both perform the same function do they not; match-up buyer and seller.
If anything distressed properties at least have some semblance of 'true market value' (gawd knows that is anymore, mind).
In any event this is hardly newsworthy, the CML predicted 40,000 repos in 2011 and it looks to be heading that way. I believe a 'normal' market should see around 30k per annum.
Arguably, it should be a lot more at present than 40k but because of previously mentioned props to the ailing property market.
Addendum, BnB would you then decline a probate prop as it doesn't sit well with your moral compass? I wonder.
bleep n booster, you are incorrect, the 2% fees rarely exist nowadays, 2% used to be a fair fee for a repo', most of which were well under 100k. Our normal fee now for repossessed properties is 1%. On a 50k property , with the amount of work involved, we do not make any money.
@Watching “These business monsters are not there to help/advise the public, they exist to make money for shareholders and directors.”
Do independents not exist to make money for their owners then?
Or is it moral to make money in a business that has one or two owners, but immoral when a business has many thousands of owners such as you and I through our pensions investing in unit trust?
@FTB Dan
Bleep n booster is on about corporates, Spicerhaart, Countrywide et-al, not propper estate agents. These business monsters are not there to help/advise the public, they exist to make money for shareholders and directors. These people enjoy the lions share of private treaty reposession instructions. B&b was merely reminding folks in the industry how the reposessions have kept the corporates afloat in the past and look set to do so again.
Real Estate Agents appreciate his/her comment and it's context, perhaps FTB's have no clue.
The amount of Support for Mortgage Interest (SMI) on offer to people gets halved from the beginning of 2011 and, ta da, data from the first quarter shows repossessions have gone up. Hardly unexpected.
@bleep n booster
EA’s are not leaches, they guide people through a complex process and bring buyers and sellers together. If they are leaches so are about half the people in the country. I myself would be under that definition. While they may be a viable object for venting your frustrations on, what with them being stood in front of you a lot, blame for the current market really should be directed to politicians in power over the last decade who’s meddling in the free market have made it anything but free resulting in these boom & bust distortions, and paralytic planning and building regulations.
"The number of repossessions in the first quarter of 2011 rose for the first time in a year, and were up 17% to 9,613" - Of course it was for the first time in a year if it was the first report for the first quarter???
True, it is very bad news for an awful lot of people. However, people should take the time to educate themselves financially and then maybe not so many people would take out large mortgages which they may not be able to afford with in a few years time.
This is shocking news for the owners of these properties, however the 2% corporate estate agency leeches, who have difficulty in getting instructions in the normal manner, will be rubbing their hands together as it could be wha\t they need to keep afloat.