Repossessions Down!

by Mark Johnston

The Council of Mortgage Lenders (CML), which represents banks and building societies, said that only 36,200 properties were seized from borrowers who had failed to keep up repayments in 2011. The number of homes repossessed last year fell to its lowest rate since 2007.

Buy to let properties accounted for 5,900 repossessions in 2011 this is up from 4,700 in 2010.

The annual total of repossessions for 2011 therefore proved to be lower than the Council of Mortgage Lenders (CML) original forecast of 40,000.

The number of households who fell behind on their payments also fell last year, there were only 159,400 mortgages in arrears which is down from 172,400 at the end of 2010.

Second charge mortgage repossessions also fell once again in 2011. A ‘second charge’ mortgage is any mortgage with a second loan secured against it. There were 864 such repossessions in 2010, but this figure fell to 827 in 2011. Thus indicating that more struggling borrowers may be getting back on top of their debts.

Home owners have been largely shielded from unaffordable payments thanks to the continuing record low Bank of England base rate, which has had a massive influence on mortgage rates.

Forbearance by lenders has also kept a lid on the numbers. Experts have stated that most lenders have made strenuous efforts to show sympathy to home owners in arrears to try to help them keep their homes, as repossession is only seen as the very last resort.

Fiona Hoyle, head of consumer finance at the finance and leasing association (FLA), said “repossession levels have fallen for the third consecutive year as lenders continue with forbearance measures aimed at helping customers in financial difficulty to remain in their homes”.

Meanwhile, housing minister Grant Shapps said “no one in financial difficulties should be embarrassed to seek help if they need it”. He also added that the government would pay for extra support for home owners facing difficulties.

Councils are to be given £19 million to offer to struggling home owners in interest free loans of less than £5,000, or grants, this is to help ease the debt pressure on many households.

But as David Birne, an insolvency practitioner at HW Fisher and Company states “arrears management still sees arrears slowly build up. At some point those debts have to be paid down”.

Shelter the housing and homelessness charity has welcomed the news that repossessions are at there lowest levels in 5 years however, it has also warned against complacency.

Gordon MacRae, of the charity, said “there are still hundreds of home owners living on a knife-edge, with arrears equivalent to 2.5% or more of their mortgage balance.

Despite the improvements, the Council of Mortgage Lenders (CML) has no plans to revise its current 2012 forecasts.

It feel that lenders are now bracing themselves for higher unemployment and greater cost of living pressures this year. Therefore the Council of Mortgage Lenders (CML) has forecast that repossessions will reach 45,000 by the end of 2012.

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