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Repossessions and mortgage arrears fall in first quarter

Posted by Richard in Property News, 19th May 2010, 2:05pm

The combination of low interest rates, signs of economic recovery, a more tolerant attitude from lenders and the measures introduced by the government has resulted in a further fall in the number of properties taken into possession during the first quarter of the year
The number of mortgages in arrears and the number of repossessions both fell in the first quarter of 2010, according to the Council of Mortgage Lenders.
 Repossessions as a proportion of all mortgages remained steady at 0.09% in the first quarter, the same proportion as in the previous quarter and down from 0.12% in the first quarter of 2009. The number of repossessions was 9,800, down from 10,600 in the previous quarter and 13,200 in the first quarter of 2009.
CML director general Michael Coogan commented:
“With all eyes on the new government and what steps it will take to address the fiscal deficit, we cannot emphasise too strongly the importance of continuing to fund the support mechanisms that are proving effective in containing mortgage arrears and repossessions.
“We hope and expect to be able to revise down our 53,000 forecast for repossessions in 2010, but we are acutely conscious of the beneficial influence that low interest rates and the package of support have played so far. The dampening effects on households and the wider housing market that fiscal tightening is likely to exert are still to be felt, but it should be a key priority to support borrowers most in need and maintain funding for the government’s housing policies.”
 Simon Rubinsohn, RICS chief economist said:
“Just as significant and welcome are the indications that this trend will continue to improve over the coming quarter. Claims issued, the initial stage of the repossession process, stood at just 18,500 which compares with a recent peak of almost 40,000 in the first quarter of 2008. There was also a further fall in the number of claims leading to an order. They are now barely 50% of where they were in the final three months of 2008.
“It is of course too soon to claim that the worst of the repossession news is now in the past. The prospect of a significant fiscal squeeze will take its toll on homeowners and it is improbable that interest rates can remain at 0.5% indefinitely. That said, the private sector is slowly gaining traction and should begin adding jobs over the coming year.
Reflecting this, we continue to believe that mortgage repossessions over the course of 2010 will not exceed 45,000 (our current forecast) and the eventual outturn could be lower.”