Is Repossession at its Lowest Level in Since the Credit Crunch?

by Mark Johnston

Is Repossession at its Lowest Level in Since the Credit Crunch?

Last year, the Council of Mortgage Lenders (CML) forecast that 45,000 homes would be seized this year by mortgage lenders who had run out of patience with borrowers who were unable to repay their home loans. Although the number of homeowners actually losing their property because they are unable to pay their mortgages appears to have fallen to its lowest level since the credit crunch began.

According to recent figures, only 26,300 properties have been repossessed in the first nine months of this year, which is 8 per cent fewer than in the same period last year.

The number of repossessions in the third quarter dropped 3.5 per cent to 8,200, representing the lowest quarterly figure since 2007, according to the data from the Council of Mortgage Lenders (CML). The number of properties taken into possession fell by 300, from 8,500.

Although repossesion in the buy to let market remains high. The higher buy to let repossessions reflect lenders are more willing to seize struggling borrowers properties. However,  the Council of Mortgage Lenders (CML) said that in the buy to let sector, repossession is only likely to occur at the end of an agreed tenancy.

A good indication that repossessions will keep on dropping gently comes from separate statistics published by the Ministry of Justice. They show that the number of repossession actions started in the courts inEngland and Wales also fell again in the third quarter of the year.

The economy has been in recession for much of the past four years, with unemployment rising to its current level of just under 8 per cent, but it seems that there are a number of factors have kept repossessions down.

Some experts believe that repossessions have fallen steadily in recent years, due to low interest rates and lenders showing restraint with borrowers in difficulty.

The Council of Mortgage Lenders (CML), director general Paul Smee said: “Our figures show that good communication and effective arrears management by borrowers, lenders and money advisers are helping the vast majority of those with mortgage repayment problems. The rate of repossession has continued to fall and it is therefore clear that lenders want to keep people in their homes”.

Other experts think that the new Mortgage Market Review should also assist in keeping repossession levels down, including a proviso that lenders continue to assist ‘mortgage prisoners’, which should help keep repossession rates down.

However, Richard Sexton, of e.surv chartered surveyors, warned that “Banks will not be able to go on absorbing long term arrears in to their balance sheets infinitely, and they also have a duty of care to ensure borrowers do not build up too much debt by allowing them to stay in a property if this is unsustainable,”

SPF Private Clients chief executive Mark Harris adds that  “Borrowers must also do their bit, ideally seeking help before they miss a payment. Do not bury your head in the sand and hope the problem will go away; it will not.”

 



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