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CML rethinking repossession forecast for 2011

The Council of Mortgage Lenders says it may lower its repossession forecast for 2011, after the latest figures show a 4 per cent fall in repossessions year-on-year.

So far this year, a total of 27,500 properties have been taken into possession – 4 per cent fewer than in the equivalent period last year.

The CML says it now appears likely that the total number of repossessions in 2011 will be lower than the CML’s forecast of 40,000.

The number of properties taken into possession by mortgage lenders in the third quarter of 2011 was 9,200, virtually unchanged from 9,100 in Q2.

The number of repossessions in the quarter equated to 0.08 per cent of all mortgages. This has been the same for five of the last six quarters, with the exception of Q4 of 2010, which experienced a typical seasonal dip, to 0.07 per cent.

There was also a slight fall in the number of households in arrears with their mortgage across all categories.

At the end of September, the total number of mortgages with arrears of 2.5 per cent or more of the outstanding balance fell to 161,600 (1.44 per cent of all loans), down 2 per cent from 165,200 (1.47 per cent of all loans) and 8 per cent lower than the 175,100 cases (1.55 per cent of all loans) at the end of September 2010.

But the trade body says despite these improvements there is still a stock of cases with significant arrears: 27,300 loans have arrears of more than 10 per cent of the outstanding balance.

In addition, the squeeze on household budgets as a result of falling real incomes, cost of living rises and increasing unemployment will negatively affect households, and could lead to increased arrears in the coming quarters.

The CML says extended forbearance by lenders has clearly been successful to date in keeping the vast majority of households facing payment difficulty in their homes, but ongoing pressures remain and the economic backdrop represents a significant challenge to the recent improving trend in arrears.

CML director general Paul Smee says: “The fall in the number of mortgages in arrears, and the stable picture on repossessions, are testament not only to the beneficial effects of low interest rates, but also to effective arrears management, and good communication between lenders, borrowers and debt counselling organisations.

“Against the backdrop of widespread financial uncertainty sweeping both the UK and the wider European economies, it is impossible to be sanguine about the future influences that households may face.

“But lenders will do their utmost to help borrowers keep their homes, whatever pressures emerge.”
 

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