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Having anticipated 75,000 repossessions in 2009 in last year’s housing market forecasts, the forecast had already been revised down to 65,000 in June, but is now being cut again in recognition of lender forbearance, government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.
In the third quarter of this year, new CML figures show that the number and proportion of mortgages in arrears both fell, despite the bleak economic backdrop. At the end of September 194,600 mortgages, 1.77 per cent of the total, were in arrears of 2.5 per cent or more of the outstanding mortgage balance. This compares with 204,200 cases (1.86 per cent of all mortgages) at the end of June.
Meanwhile 11,700 properties were taken into possession in the third quarter, up slightly from 11,400 in the previous quarter, and 5 per cent higher than the number in the third quarter of 2008, but still lower than the 12,700 in the first quarter of the year. Around a quarter of the possessions in the third quarter of the year took place without a court order, very similar to the proportion in the previous quarter of the year.
Looking ahead, the CML has today also published revised 2009 mortgage market forecasts and new forecasts for 2010. The expectation is of continuing slow recovery. The CML forecasts that:
The number of housing transactions will reach 810,000 this year and 850,000 next year
Gross lending will total around £141 billion this year and £150 billion next year
Net lending will be modestly positive this year at £8 billion (revised from a negative expectation of minus £5 billion previously), and £15 billion next year
Assuming interest rates remain at their current low levels, the number of mortgages 2.5 per cent of balance or more in arrears will end the year at 195,000 (down from previous forecast of 360,000), and will rise only modestly next year to 205,000.
The number of repossessions this year will total around 48,000 (0.43 per cent of all mortgages) and around 53,000 (0.48 per cent) next year.
Commenting on the latest arrears data and on the new forecasts, CML director general Michael Coogan said:
"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.
"Borrowers should take heart from the latest findings, as they reinforce the fact that lenders really do want to keep people in their homes – and are doing so.
"In terms of new lending next year, we expect a modest increase. But it is difficult to see the case for a dramatic upturn in the absence of significant improvement in the wider economic picture. There is a risk that public spending cuts and higher taxes could choke off recovery. So, although we have become more optimistic, we remain cautious about market prospects."
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