Repossessions ease over Spring says CML
Friday, 14 August 2009 11:29 AM
Fears that homeowners could be failing into negative equity and mortgage arrears may have eased a little today as the Council of Mortgage Lenders (CML) said repossessions fell in the second quarter of this year.
According to the latest data there were 11,400 repossessions in the second quarter of 2009, 10 per cent fewer than the 12,700 in the first quarter of the year but 14 per cent more than the 10,000 repossessions in the second quarter of last year.
Meanwhile, 205,600 mortgage borrowers were in arrears by 2.5 per cent or more of the outstanding mortgage balance at the end of Q2, compared to 203,900 at the end of the first quarter, and 139,700 at the end of the second quarter of 2008.
Of some concern is the number of borrowers in arrears of three months or more - the point at which lenders are likely to consider more stringent action such as repossession. At the end of June, the number of borrowers three months behind on their mortgage payments stood at 270,400, compared with 264,700 in Q1 2009.
More significantly the number of borrowers in arrears at the same time last year was 152,700.
The CML said a combination of factors had helped keep mortgage arrears and possessions in check, despite the recession.
It said lenders were showing a greater degree of tolerance to borrowers who were trying to resolve their payment problems and had a realistic chance of doing so.
Low interest rates are also helping ensure that arrears grow less quickly, giving borrowers a better chance of getting back on track and lenders more scope to extend forbearance.
Meanwhile, the CML said government schemes are providing some help for borrowers in difficulty by promoting early communication between borrowers, lenders and debt advisers.
But the trade body also gave warning that while the latest figures reflected efforts being made to manage mortgage arrears and avoid possession they were still likely to rise in the second half of the year because of the weakened economy and rising unemployment.
The CML's head of policy Jackie Bennett said: "With unemployment rising and the economy still weak, the outlook will remain challenging for the rest of this year and into 2010. But today's data shows that lenders are committed to helping borrowers manage their way through temporary payment problems and get their mortgage back on track over time, avoiding possession where possible.
"Clearly, low interest rates are also helping borrowers who are committed to working to resolve their arrears, paying what they can - and when they can - towards their mortgage, and maintaining good communication with their lender.
"Lenders can only show forbearance if borrowers show a continuing determination to address their problems and discuss them with the lender at the earliest opportunity. So, the key message continues to be to talk to your lender as soon as possible when difficulties emerge and take advice from an independent money adviser if you have other debts as well as your mortgage."
