Repossession rise slower than expected

Around 11,700 people had their homes repossessed during the three months to the end of September, up from 11,400 in the second quarter, but down on 12,700 during the first three months of the year, the Council of Mortgage Lenders says.

The group said it was slashing its forecast for repossessions during 2009 to 48,000, due to a combination of increased lender forbearance, Government schemes to help people stay in their homes and the impact of low interest rates.

It had originally predicted 75,000 people would lose their homes this year, although it revised the figure down to 65,000 in June (see the Mortgage Arrears guide).

The number of people behind with mortgage repayments also dropped during the third quarter, despite the bleak economic backdrop, with unemployment at almost 2.5 million.

Arrears forecast down

Around 194,600 people were in arrears of at least 2.5% of their outstanding mortgage at the end of September, the equivalent of 1.77% of all mortgage customers, down from 204,200 or 1.86% at the end of June.

The CML says it now expects 195,000 people to be in arrears at the end of this year, well down on its previous forecast of 360,000.

It is also predicting there will be only a modest deterioration in the number of people who are unable to keep up with their mortgage next year, with repossessions expected to rise to 53,000 in 2010, while it predicts the number of people in arrears will increase to 205,000.

CML director general Michael Coogan says: "We are glad to have been wrong on our previous forecast for mortgage repossessions this year.

"Low interest rates, and lenders' forbearance policies, have helped to cushion many households facing financial problems.

"And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time."

Court orders

The Ministry of Justice also released figures today showing there had been a fall in the number of repossession claims issued to courts in England and Wales during the third quarter.

A total of 24,938 claims were issued on a non-seasonally adjusted basis, 6% fewer than during the second quarter of the year, and 34% below the same period of 2008.

The drop has been driven by the introduction of the Government's pre-action protocol last November, under which courts can grant a repossession order only if all other measures to keep someone in their home have failed.

But despite the drop in the number of claims issued, the number of claims which led to a repossession order being made rose for the second consecutive quarter to 20,917, although the figure remained well down on the 29,284 repossession orders granted during the third quarter of last year.

Around 44% of the repossession orders granted were suspended orders, compared with 47% a year earlier.

Further reading/Key links

Prevent repossession: Mortgage arrears help Cut costs : Cheap mortgage finding