Trend appears less dire than previously forecast, say mortgage lenders
(LONDON) Home repossessions in the United Kingdom rose by 23 per cent in the first quarter, although the trend appears to be less dire than previously forecast, the Council of Mortgage Lenders said last Friday.
The Council, which had predicted a total of 75,000 repossessions this year, said that there were 12,800 repossessions in the first three months of the year, up from 10,400 in the fourth quarter.
'Although repossessions are still rising, the CML now thinks its 75,000 forecast looks pessimistic for the year as a whole, and expects to revise the figure downwards in its next housing market forecast update,' the group's report said.
The government separately reported that court orders for repossession had dropped by 43 per cent in the first quarter compared to the last three months of 2008.
However, the Ministry of Justice also reported that 3,461 companies became bankrupt in the quarter, up 2 per cent from the previous quarter, and that personal bankruptcies rose 9 per cent to 16,775.
The number of loans with arrears of more than 2.5 per cent of the mortgage balance rose to 205,300, up 12 per cent from the fourth quarter, the CML said.
'It is quite clear that the number of arrears cases is rising far more markedly than the number of repossessions,' said Michael Coogan, the council's director-general.
'Lenders are demonstrably increasing the forbearance they are offering, while many struggling borrowers have gained some breathing space through lower interest rates feeding through to lower monthly payments.'
The Council said last Thursday that 31,000 mortgages were advanced in March, up from 24,000 in February.
There was also a rise in the number of first-time buyers to 12,500 during the month, accounting for 40 per cent of all loans, the highest proportion since April 2005.
Members of the Council of Mortgage Lenders accounted for 98 per cent of the nation's mortgage lending. The Ministry of Justice said that 17,054 mortgage possession orders were made in the first quarter; 47 per cent were suspended, normally on condition of the borrower meeting requirements set by the court.
The ministry attributed the 43 per cent drop in orders to new rules on efforts that must be made by borrowers and lenders to resolve a problem before an order is sought. It is not yet clear, the ministry said, whether the new procedure is delaying rather than reducing repossessions.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said he believed that government efforts to combat repossession were working.
'As these schemes begin to have a meaningful impact over the coming months, the likelihood is that the number of claims issued will continue to weaken,' Mr Rubinsohn said. -- AP
Source: Business Times, 19 May 2009