A rare piece of good news for the government on the economic front: the Council of Mortgage Lenders has just slashed its prediction for the number of repossessions this year.
The Council of Mortgage Lenders has cut its forecast for the number of repossessions this year to 48,000. Having anticipated 75,000 repossessions in 2009 in last year’s housing market forecasts, the forecast had already been revised down to 65,000 in June, but is now being cut again in recognition of lender forbearance, government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.
In the third quarter of this year, new CML figures show that the number and proportion of mortgages in arrears both fell, despite the bleak economic backdrop. At the end of September 194,600 mortgages, 1.77% of the total, were in arrears of 2.5% or more of the outstanding mortgage balance. This compares with 204,200 cases (1.86% of all mortgages) at the end of June.
Meanwhile 11,700 properties were taken into possession in the third quarter, up slightly from 11,400 in the previous quarter, and 5% higher than the number in the third quarter of 2008, but still lower than the 12,700 in the first quarter of the year.
Labour will attribute the downgrade to its activist measures to help people stay in their homes. Up to a point this is true. But future levels of arrears and repossessions will ultimately depend on a] how quickly interest rates go up again and b] whether unemployment will keep on rising, and at what pace (economists have been surprised by labour market resilience).
Jim Pickard
Kiran Stacey