Repossessions Fall to Five-Year Low
The number of homes being repossessed has fallen to its lowest level since 2007, says the Council of Mortgage Lenders (CML). Last year the CML forecast that 45,000 homes would be seized but, so far, only 26,300 properties have been repossessed in the first nine months of 2012. The third quarter of this year saw 8,200 repossessions, down from 8,500 in the second quarter and substantially lower than the 9,600 cases that were reported for the same period of 2011.
The fall in repossessions is bucking the trend; the UK economy has been in recession for most of the last four years and employment currently stands at 8%. The reason for this is thought to be two-fold; the Bank of England keeping the base interest rate at its historically low level of 0.5% and lenders being under pressure not to repossess. Lenders now have to jump through a number of hoops to obtain a successful court order to seize a home – having to prove that it is genuinely the last resort.
Looking at the bigger picture; the number of borrowers in arrears has remained stable at 159,100, but experts say that the number of those in most arrears, owing more than 10% of their outstanding mortgage, rose to 29,000. That is the fourth quarter in a row that this figure has increased and it is likely that the banks’ patience will run out soon.
Barring any drastic events in the last quarter of the year, repossessions for 2012 will probably total around 35,000. This would be the lowest figure since 2007, where there were 25,000 repossessions in the UK. Whilst interest rates are expected to stay at 0.5% for the foreseeable future many households will continue to struggle to afford their mortgage due to relentlessly rising living costs and further job losses. If repossession numbers are to continue to fall, the banks will have to continue to look after their borrowers by offering services such as an interest-only loan switch, payment holidays or extension of mortgage terms.
Sources: bbc.co.uk, cml.org.uk (image courtesy of reuters.com)