Home Repossessions in The UK Have Fallen to a Two and a Half Year Low

by Mark Johnston

In the third quarter of 2010, home repossessions in the United Kingdom have fallen to a two and a half year low. New figures published today have shown that nearly 9,000 properties were repossessed by banks and building societies during the three months of July, August and September. This was a reduction of around 5% when compared to the previous 3 months and a 27% reduction when compared to the same time last year.

This is the fourth quarter that repossessions have fallen and the lowest levels since the start of 2008. The Council of Mortgage Lenders highlighted that 28,400 houses had been taken back by lenders in the first nine months of 2010 which means that the figures are well down on the Council of Mortgage lenders forecast figures for 2010 which were originally 53,000 and were revised to 39,000.

The report suggested that the lower than expected repossessions were due to the additional support that the government has provided to struggling households as well as the more affordable mortgage rates due to the historic low base rate of 0.5%.

Michael Coogan, director general of the CML, said: “Despite the severity of the economic slowdown, and the likelihood of only a slow and protracted recovery, a combination of low interest rates and the commitment of borrowers, lenders, the Government and debt advisers has helped to keep mortgage payments problems in check so far. But we cannot take falling arrears and possessions for granted, and the recent welcome trend may reverse.”

The number of struggling households also fell during the third part of the year.  176,100 had fell behind with mortgage payments in the last quarter which was down 2.5% when compared to 178,200 in the second quarter of the year. Although this was pretty much in line with the Council of Mortgage Lenders figures, it was a lot less than the 205,000 that they had originally predicted.

The UK courts also published figures that showed a 20% decrease in the number of repossessions against the same time last year. The Ministry of Justice said that the total number of repossessions had been in decline since the start of 2008. This is probably down to new legislation that was introduced at the same time which meant that repossession would only be granted if all other avenues had failed.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The CML and Ministry of Justice data indicate that government initiatives to reduce repossessions by requiring lenders and borrowers to examine all alternatives is having a significant beneficial impact in helping people to keep their homes. Nevertheless, there is the possibility that in a number of cases, the mortgage pre-action protocol is just delaying people losing their homes. Indeed, a significant number of homeowners are still at risk, particularly if economic activity slows markedly as tighter fiscal policy bites. Furthermore, any rise in interest rates would be liable to send a significant number of financially stretched people over the edge.”

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