News that repossessions have fallen has failed to impress one mortgage finance specialist, who says latest figures do not represent what is now happening in the market.
Mark Blackwell, managing director of financial IT specialist xit2, said: “Our repossession exchange, Rex, has already seen a conspicuous uplift in repossessions for one lender.”
He added: “We’re just seeing the deck chairs being arranged.”
According to the latest figures from the Council of Mortgage Lenders, the number of properties taken into possession by first charge mortgage lenders in the first half of 2011 was 7% lower than in the first half of 2010.
Its data shows 9,000 repossessions in the second quarter of the year, slightly lower than the total of 9,100 in the first quarter, bringing the total to 18,100 for the first half of the year, compared to 19,500 in the first six months of 2010.
The total number of mortgages in arrears was also broadly unchanged in the second quarter of the year. There was a slight increase in the number of mortgages with low levels of arrears, but a reduction in the number in deeper arrears.
The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance edged up from 77,800 to 78,500. But those in arrears of more than 2.5% of the balance declined from 166,700 to 164,500.
Overall, the number of mortgages more than 1.5% in arrears declined to 243,000 in the second quarter of this year, from 244,500 three months earlier.
The CML confirms that it is not making any revision to its arrears and possessions forecasts on the basis of experience in the first half of the year. The current forecast is for a repossession rate of 0.35% this year, and 0.4% in 2012, equating to 40,000 cases of repossession in 2011 as a whole, and 45,000 next year.
On arrears, the forecast is for a steady position of 180,000 mortgages in arrears of 2.5% or more of the balance, representing 1.58% of the total 11.3 million stock of first-charge mortgages.
CML director general Paul Smee said: “Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates. Despite current uncertainty in financial markets, we see no need to revise our forecasts.
“It is clear from the low rate of repossession that lenders do want to keep people in their homes, and are successfully doing so in the vast majority of arrears cases. Repossession really is seen as a last resort.”
However, industry analysts were less impressed.
Ian Long, managing director of St Trinity Asset Management, said: “With mortgage rates at exceptional lows, millions of mortgage holders have been enjoying artificially low monthly payments. However, this should not create a false sense of security for borrowers.
“Repossession numbers have remained low, but with fears over the weak economy and its impact on the labour market, they will begin to climb steadily.”
Mark Blackwell, of xit2, said: “Arrears and repossessions remain low for now, but arrears and repossessions are like an iceberg waiting to hit the property market – there is a lot of trouble hidden out of sight, just below the surface.
“Our repossession exchange, Rex, has already seen a conspicuous uplift in repossessions for one lender, probably driven by a change in forbearance rules. As these become less generous across the industry, we’ll start to see more of the iceberg that’s been lying unseen, under the water line.
“The UK has remained an island of relative calm amidst the economic storm engulfing Europe, but growth has been sluggish. Borrowers have already seen their household budgets ransacked by high inflation and stagnant growth, even though we have yet to feel the pinch from the Government’s fiscal austerity programme.
“When this arrives there will be more redundancies, pay cuts and fewer salary rises, meaning the UK’s property market is almost certain to be hit by a titanic rise of arrears and repossessions.
“Any positivity suggested by these figures is not representative of positive trend – we’re just seeing the deck chairs being rearranged.”
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Comments
Thank goodness EA's don't view the world like Anon & Co.
One of these HPC’ers who writes here is a baker, he knows a bit about money and prices. He tried to economise in his own business by making the holes in his doughnuts bigger. He soon gave it up, though. Incredulous, the bigger the hole was the more dough he had to put round it.
Think it through please, ............ all sides.
CoTW
Thank goodness EAs don't ever ever ever see things in a way that suits them and their BTL portfolio.
CTW - Vested Interests in the housing market issuing their own reports! Who would've thought it!
; )
Breaking News....
Man who owns a "repossession exchange" claims repossessions will rise....
Coming up next on News Today......
Man who owns bakery claims sales of bread set to soar!!!
Man who owns turkey farm claims this will be best Xmas ever!!!
Man who owns rock salt mine warns this will be worst winter ever!!!
etc
Today's Home.co.uk report echoes several of the comments here:
QUOTE
UK property sales are losing momentum: typical time on market is currently 22% longer than in August 2010. In terms of both supply and demand, the 2011 UK home market continues to experience diminishing levels of activity.
Whilst nominal home prices appear static, inflation is severely eroding capital invested in property. Comparing ONS June figures and the YoY change in asking
prices for the same month shows that asking prices continue to fall, in real terms, by 6.8% per year relative to the RPI (ex. housing). Meanwhile, homes are becoming
more affordable as prices fall relative to average earnings, 2.6% below the AEI (average weekly earnings).
END
Seems that those who bought property as a home have a lot less concerns than those who have bought it as an investment.
FBA - so because the number of people in arrears dropped to 243000 it means none of these will be on the market?......Really?
However I agree with you both demand and supply have fallen......maybe not for the same reasons !
p.s.I am not a HPC'er... as you call them
How many of these lenders are currently still supported by taxpayer money? That gives the govt a lot of influence over limiting forbearance. Taxpayer-owned lenders chuck taxpayers out of properties???
FBA I think you may have misuderstood my point I am not mentioning anything to do with house prices, I am saying that the repossion figure will go up when lender forbearance ends and interest rates go up!
This time last year I had my house valued at £399k by Realist & Co but received a valuation of £499k from Foxwide. Obviously I was delighted with the higher valuation and wasted no time ringing the agent that almost cost me one hundred grand and informing him he was an idiot.
A year later and despite having dropped my price by £25k every 3 months for a year I have still not sold. It’s is now on at £399k. I did get in touch with Realist & Co to ask for a fresh valuation, they are now saying £369k. But my current agent tells me it is better to overprice and chase the market down.
@Fun Boy Agent
I agree with a lot of what you say.
Providing there are no further serious unforseen circumstances I think the market is close to being balanced but with turnover greatly reduced for a time.
Supply and demand will decide in the end.
You know, athough I have the impression that quite a few who post on here think so, vendors are not obliged to keep EA,s in business!
Well that's 243,000 properties that will not be on the market at lower prices for the HPCers isn't it Unhappy?
“It is clear from the low rate of repossession that lenders do want to keep people in their homes, and are successfully doing so in the vast majority of arrears cases. Repossession really is seen as a last resort.”
The owners will need to tough it out and stay put.
Of the remaining 11.3 million stock of first-charge mortgaged owners, let us think about them!
You keep banging your drum Unhappy about them needing to take a hit to move on. There may be a small % who will, but again I think a lot of these people will sit tight and not move at all.
It might be that one of the 18,100 repos for the first half of the year there was one property being exactly the property you want in the location you require, but in truth, with the hoops the agents have to jump through to prove 'best price' was achieved for them on the current market, it is unlikely many of these would prove to be outstanding bargains.
So, low demand due to lack of finance, yes, but low supply also, the two will meet in the midle is my guess.
I can see sale agreed figures coming down a bit, but I do not see vendors entering the market in droves at lower asking prices.
I fear we have a steady market at much lower transaction levels for some time to come. Increasingly I find I have Vendors with a buyer, complete chain backwards, but unable to find a property for their needs on the market at this time to move to, and chains break down as these vendors give up
What is the solution?
Banks are showing forbearance to avoid write downs, interest rates are at record lows......infation is rising. There is only one way this figure will go over the mid term