Repossessions in the first quarter were higher than the 8,700 that took place in the fourth quarter of 2011, but this represents a normal seasonal pattern. Overall, the repossessions landscape appears stable for the time being.
Through the first quarter of the year, there was a modest improvement in the total number of mortgages in arrears. The number of mortgages with arrears of 2.5% or more of the outstanding balance fell to 157,800 (1.4% of all loans), down from 160,300 at the end of December 2011 and 170,500 at the end of the first quarter of 2011.
Within the total number of arrears cases, the largest improvements were in the middle arrears bands. Year on year, the number of loans in the 5-7.5% arrears band fell by 12%, and reached its lowest number since the fourth quarter of 2008, while the number in the 7.5-10% band fell by 13% to its lowest since the third quarter of 2008.
The only arrears band to show a year-on-year increase was the group of loans with arrears of 10% and over, with the 28,000 loans in this category, 300 higher than a year earlier, representing the highest number since June 2000.
The 45,000 central forecast for repossessions in 2012 may be revised down when the CML publishes revised housing market forecasts later in the summer. However, continuing pressures on household finances, changes to welfare benefits, and an upward drift in mortgage rates all have the potential to disrupt the current stable picture.
Paul Smee, CML director general, comments:
"Combined efforts by borrowers, lenders and money advisers are ensuring that payment difficulties are being managed effectively, with the result that the number of repossessions remains relatively low. Repossession really is a last resort, as the numbers show. Anyone worried about their mortgage should be assured that lenders will try to help them get back on track, as long as this is a realistic prospect."
Mark Blackwell, managing director of xit2, said:
“Mortgage lenders are being unsustainably tolerant of borrowers in arrears. Unemployment is increasing, and personal finances are being squeezed by the rising cost of living, which suggests repossessions should be higher, but they are being kept artificially low by lenders generous forbearance packages. Their generosity is camouflaging serious problems in borrower finances.
Nick Hopkinson, PPR Estates, comments:
“Stagflation, caused by a combination of falling or static incomes and increasing living costs, is currently squeezing the financial life out of many struggling homeowners. Anyone still struggling to repay their debts after over three years of record low interest rates is not likely to recover any time soon without a lottery win or some kind of divine intervention. It is therefore no surprise that even according to the official bank industry figures the number of homeowners with mortgage debt arrears of over 10% is increasing.
"These numbers are the tip of the iceberg - the huge numbers of struggling homeowners in middle England who are in a negotiated ‘forbearance’ agreement and only paying debt interest or some other agreed amount are excluded from these ‘official’ industry figures.
“What is even more worrying for mortgage borrowers is that their personal interest rate costs are creeping ever upwards already, long before the Bank of England has suggested the need for a Base Rate rise. With the current recession grinding on, particularly outside London, and the Euro-zone uncertainty remaining fundamentally unfixed, overall repossessions are still likely to be very close to 40,000 in 2012.
"Anecdotally, the major lenders are starting to see if they can negotiate away some of their bad debts through discreet private sales and are certainly not in the mood to increase their mortgage books. House prices are likely to fall further in many parts of the UK against this backdrop.”
