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More arrears – but fewer repossessions are forecast

24 June 2009
Written by rosalind renshaw

Arrears have shot up, but the forecast number of repossessions has been cut – and the Government announced more free debt counselling for those faced with losing their homes. ¬

The Financial Services Authority revealed that arrears soared by over one third in the space of a year, and by 6% since last December, to reach 399,000 in the first quarter of this year.

But the Council of Mortgage Lenders has cut its forecast for repossessions for 2009 by 10,000, from 75,000 to 65,000.

It says while conditions in the housing and mortgage markets remain extremely challenging, borrowers are gaining from lower interest rates while government interventions to provide support for struggling home-owners are working.

The CML also says lenders are showing greater forbearance to borrowers, and not rushing to possess their homes. Recent Ministry of Justice figures for the first three months of 2009 show a 40% drop in lenders bringing repossession claims to court.

Meanwhile, new housing minister John Healey announced the doubling of funding, to £1.5m, for free, on-the-spot, legal advice in courts. He said the service was already proving its worth.

The money will provide extra court desks offering legal advice and representation for people facing repossessions or eviction hearings in England, building on a scheme

But Nick Hopkinson, director of Property Portfolio Rescue, which buys up distressed properties, poured cold water on everyone’s parade.

He said:  “The CML’s decision to revise its repossession forecast seems a little premature in the light of rising unemployment and the on-going fragile nature of our economy.

“It is evident that arrears are shooting through the roof and while these figures may not translate immediately into repossessions, any measures being taken by lenders to assist those borrowers struggling with mortgage repayments will only delay the inevitable.

“Those who can’t make their mortgage repayments now will only find themselves in a worse situation next year when interest rates go up and they have even less equity in their homes.

 =“We are continuing to receive a growing number of inquires from sellers, desperate to sell their property in an attempt to avoid imminent repossession and I would expect to see this continue for the remainder of 2009 and into 2010 as reduced incomes leave many home owners with little choice.”

 He said he expected to see repossessions continue to rise for the remainder of 2009, exceeding 70,000 by the end of the year.

 The CML also expects around 360,000 mortgages to be in arrears equivalent to 2.5% or more of the mortgage balance by the end of the year.

The CML's forecast for housing transactions remains unchanged, at 700,000 for the whole of 2009.

Comments

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    Christopher - to state " Why are the government trying to help a broad mass of people whom over borrowed to afford something they should never have been give, ie a house and carefree spending lifestyle" without giving any thought at all to the many, many thousands who are in arrears through redundancy caused by the global economic meltdown is rash to say the least. Of course there are many who did exactly as you state, but surely the lender has to accept some responsibility for their part in allowing the customer to overborrow, thus putting all parties in the predicament. Arrears is a two-way thing - the amount of arrears is a balance affecting both the lender and the borrower and therefore an amicable agreement as to how to bring the arrears under control is by far the best option - especially with 'repo' sales values tumbling the majority of such sales into negative equity. Any help that the government throws in to alleviate the current situation is money well spent, rather than the 'lost' millions in sales revenues, fees and costs and rehousing costs - not to mention the lack of available housing to put these individuals and families in. Your next statement - "repossessions will rise and interest rates will definately rise. Then first time buyers and those ridiculously priced out of the property market will see at long last, property at affordable prices to annual incomes" is also wide of the mark. FTB's never even get a sniff at many of these repossessed properties, as they are sold to investors and property companies who are seen as safe bets by Agents and lenders alike. The FTB's then are left still in the same situation, and end up renting a home that they could have easily bought - and paying more to boot! Don't forget, PPR fall into the above category...he is on a fishing trip & won't come back empty handed!

    • 25 June 2009 15:27 PM
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    chris - Like your style -Spot on

    • 24 June 2009 17:23 PM
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    Well he would do since he or his PR company almost certianly spun the story, wake up mate.

    • 24 June 2009 12:24 PM
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    Reading this report and many other similar online, I must say that Nick Hopkinson, director of Property Portfolio Rescue has summed it up perfectly. Why are the government trying to help a broad mass of people whom over borrowed to afford something they should never have been give, ie a house and carefree spending lifestyle. Government are just prolonging the inevitable, repossessions will rise and interest rates will definately rise. Then first time buyers and those ridiculously priced out of the property market will see at long last, property at affordable prices to annual incomes.

    • 24 June 2009 11:28 AM
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