The Council of Mortgage Lenders has revealed today that repossessions by first charge lenders in 2010 accounted for just 0.3% of all mortgages, 24% lower than 2009. In the fourth quarter the number of repossessions was down 11% on the third quarter and down 26% on the same period in 2009, this marks the fifth consecutive quarterly decline in repossessions.
Overall, CML say that the latest data is broadly in line with their most recent forecast for 2010 and they continue to expect a 2011 outturn of 40,000 repossessions and 180,000 mortgages in arrears. Uncertainties however clearly remain not only regarding interest rates but also due to the recent reduction in the rate at which Support for Mortgage Interest is paid, down to 3.63% from 6.08%, but also the impact that changes to the court process in possession cases in the courts in Scotland, and the reduction in the price that will be paid for properties acquired under the mortgage rescue scheme delivered through local authorities. The CML say that they will be monitoring developments closely.
CML director general Michael Coogan commented:
"Lenders are continuing to work hard to help their borrowers who face temporary financial difficulties. Anyone who is worried about being unable to pay their mortgage should contact their lender and seek advice at an early stage from Citizens Advice, Shelter, National Debtline or other local advice agencies. This helps to prevent problems escalating and becoming more difficult to resolve. As the numbers clearly demonstrate, repossession is a last resort. Most people’s payment difficulties can be managed and controlled for a period until their circumstances improve.
As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available. We will be monitoring developments closely, but at present we continue to expect the number of arrears and repossessions to be in line with our forecasts of 40,000 repossessions and 180,000 arrears cases as at the end of 2011."
Robert Denman, Head of Lender Support Services at Goldsmith Williams, commented:
“Today’s figures are certainly good news for home owners and the market, and it’s clear that repossession continues to be a measure of last resort for quality lenders.
The impact of the low interest rate has been highlighted by the stats and, coupled with the requirements of the pre-action protocol and the alternative measures that lenders are taking to support their customers, such as LPA receiverships, the need for repossession action has decreased significantly.
Nevertheless, as CML has stated, it’s a cautious outlook for repossessions in 2011 and we will work closely with our lender clients to ensure that they have the comprehensive support that they need to deal with any market changes.”
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