UK property repossessions forecast for 2009 revised dramatically downwards

The expected number of property repossessions in the UK has dropped dramatically as understanding lenders, government measures and low interest rates help people in trouble to keep their homes.

The Council of Mortgage Lenders has cut its forecast for the number of repossessions in 2009 to 48,000, down from 75,000. It is the second time this year it has revised its forecast downwards.

The organisations latest figures show that the number and proportion of mortgages in arrears both fell in the third quarter of the year, 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.

The 11,700 properties though 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. Around a quarter of the possessions in the third quarter of the year took place without a court order, very similar to the proportion in the previous quarter of the year.

Looking ahead, the CML’s mortgage market forecast for 2010 points to a continuing slow recovery. It says that the property transactions will reach 810,000 this year and 850,000 next year. Gross lending is expected to be £150 billion in 2010, up from £141 billion this year.

‘We are glad to have been wrong on our previous forecast for mortgage repossessions this year. Low interest rates, and lenders’ forbearance policies, have helped to cushion many households facing financial problems. And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time,’ said CML director general Michael Coogan.

‘Borrowers should take heart from the latest findings, as they reinforce the fact that lenders really do want to keep people in their homes and are doing so. In terms of new lending next year, we expect a modest increase.

It is difficult though to see the case for a dramatic upturn in the absence of significant improvement in the wider economic picture. There is a risk that public spending cuts and higher taxes could choke off recovery. So, although we have become more optimistic, we remain cautious about market prospects,’ he added.


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