Press
Arrears, repossessions to decline in 2010 - CML
by Joy Dunbar
FinancialAdviser 19th November 2009
The number of mortgages in arrears will fall over the next year, latest figures from the Council of Mortgage Lenders have revealed.
More than 194,000 mortgages, 1.77 per cent of the total amount in the UK, were in arrears at the end of September according to the figures.
This compares with 204,200 cases, 1.86 per cent of all mortgages, at the end of June.
The CML has also revised its forecast for repossessions this year. It was predicting 75,000 by the end of the year, but this has now been reduced to 48,000.
Michael Coogan, director-general of the CML, said: "Low interest rates, and lenders' forbearance policies, have helped to cushion many households facing financial problems.
"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."
Meanwhile, gross lending in the buy-to-let mortgage market grew to £2.1bn in the third quarter for the first time in two years, according to figures from the CML.
Mr Coogan said: "Future demand for housing in all tenures supported by lenders will remain strong, despite mortgage funding constraints and low construction rates. With funding for social housing under pressure, the private rented sector has a strong future."
James Carter, principle of London-based adviser Independent James, said: "Interest rates are being kept artificially low which is reducing arrears. It is cheaper for people to pay their mortgage than rent.
"In the 1990s interest rates rocketed because of the exchange rate mechanism debacle. This time it is different because interest rates are low. Employers seem more reticent to make people unemployed and are using flexible working initiatives which contribute to less repossession."
Mark Blackwell, managing director of property and mortgage outsourcing specialist Xit2, said: "If the repossessions process has been genuinely well-managed over this year then this really is good news.
"As far back as February we were saying the CML's 2009 repossession forecasts were at least 10,000 too high. The statistics were too pessimistic and it is no surprise they have had to be revised down again."
Sarah Teather, housing spokesman for the Liberal Democrats, said: "Ministers have spent billions of pounds to save the banking system, but their efforts to help those facing repossession have been shamefully inadequate.