Number of Property Repossessions Falling

publication date: Aug 20, 2010
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Number of Property Repossessions Falling


According to the Council of Mortgage Lenders, despite predictions of the number of repossessions reported to rise to 53,000 this year versus around 45,000 in 2009, the latest report from CML suggests that property repossessions are falling and will end up at 39,000 in 2010. In contrast, during the last property recession in the 1990s, repossessions increased to around 85,000 as interest rates hit 15%.

On top of the reduced numbers of repossessions, the number of home owners that are falling behind with their mortgage payments are also falling – suggesting the number of repossessions will continue to fall thanks to the low interest rates. CML state “As at the end of June there were 178,200 loans with arrears equivalent to 2.5% or more of their mortgage balance. This was 5% lower than at the end of March, and 17% lower than a year earlier.”

The new forecasts for 2010 say that there will be “175,000 mortgages to end the year 2.5% or more in arrears, compared with the previous forecast of 205,000. A total of 39,000 repossessions is now forecast for 2010 as a whole, compared with the previous forecast of 53,000.”

Does this mean we are out of the woods with regards to property repossessions which during the property boom years settled at around 25,000 per year? CML doesn’t think so, they say that “Finely-balanced arrears cases are the ones who may be at most risk of tipping into repossession if there are negative changes such as higher interest rates or reduced benefit support.” CML director general Michael Coogan said: "Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession. However, the safety net for borrowers is weakened by the prospect of higher interest rates, a possible rise in unemployment, a counter-productive stigma hanging over mortgage payment protection insurance, uncertainty over future debt advice funding, reduced government support for mortgage payments, and mortgage rescue schemes being reviewed as part of the deficit reduction plan".

So, watch this space, as it appears that rising interest rates and/or unemployment are the key components to increasing repossessions. Let’s not forget, much of the future unemployment is likely to come from the civil service and, unlike much of the unemployment created during the recession in retailing and entertainment with people who don’t own property, civil servants tend to own property. So future cuts in government spending could have a dramatic impact on repossessions and the property market, especially in areas which are highly reliant on government jobs.

If you are worried about how to pay your mortgage, feel free to contact us at enquiries@designsonproperty.co.uk or on our 0845 838 1763 number (this means you get charged at a local rate) and we’ll do our best to find a solution for you.

For further FREE information, take a look at our Repossed Property Section and some of our other articles concerning repossesion:-

 


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