Angela Jameson
November 21, 2008
TimesOnline
Repossessions in July, August and September jumped sharply by 12 per cent and, according to the Council of Mortgage Lenders, full year numbers are expected to soar by 70 per cent compared to 2007.
The number of repossessions that took place over the summer was 11,300, as an increasing number of homeowners are struggling to pay their mortgages. Today, the CML maintained its forecast that total repossessions for the year will reach 45,000, marking a 70 per cent increase on last year's total.
The latest figures from the CML also show that the number of mortgages in arrears by at least three months had jumped by 8 per cent.
The number of cases where people have fallen behind in their in mortgage repayments by the end of September was 168,000, with lenders now suggesting that the total number of mortgages in arrears is likely to surpass previous forecasts of 170,000 by the end of the year.
Michael Coogan, director general of CML, said: "Looking ahead, conditions in the wider economy suggest a worsening picture for mortgage arrears, however carefully lenders handle their treatment of borrowers in difficulty."
He called for the Government to step up its help for homeowners facing difficulties in Monday's pre-Budget report.
"Increased help with housing costs is needed for a wider range of borrowers facing unforeseen repayment difficulties where there would otherwise be little prospect of early improvement. Next week's pre-Budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited," he said.
Mortgage lenders were trying to constrain the level of repossessions, he said.
Simon Rubinsohn, RICS chief economist, said the latest figures demonstrated that the worsening economic climate was beginning to have a marked impact on both the levels of arrears and repossessions in the property market.
"With unemployment set to rise sharply as the recession bites, it is inevitable that both indicators will rise further in 2009," he said.
Buy-to-let mortgages, which had previously been performing well, have also seen a rapid deterioration in the three months to September.
This has been attributed to falling rents and an over-supply of properties in some areas, which means that landlords are unable to let their property or achieve high enough rents to support their borrowing commitments.
"Ominously, however, the buy to let market is now accounting for an increasing share of mortgage arrears. The latest RICS survey of the residential lettings market shows rents are now declining which, if persistent, could exacerbate the pain in this sector," Mr Rubinsohn said.
Fraud is also thought to have been a contributory factor in the worsening performance of buy-to-let loans.
A number of banks, notably Bradford & Bingley, have made provisions for fraudulent valuations. There have also been a number of police reports on the evidence of mortgage fraud by organised crime rings.
A spokeswoman for the CML said: "The issue of fraud in the buy-to-let sector has been well documented. This year we have worked closely with developers to make sure that there is full disclosure of incentives that they may be offering to try and combat this problem."
The problems of buy-to-let landlords have been compounded because it is now more difficult to sell as an exit strategy, while the availability of new buy-to-let mortgage finance has contracted sharply.
The CML believes that the relatively low rate of repossessions in the buy-to-let market is unlikely to continue in the future.
Figure from the Ministry of Justice, which reflect repossession actions in court, rose by 9 per cent compared with last year's figures at 38,511. The figure is higher than the CML's figure because not all court action results in an actual repossession.
Mortgage possession actions were up nearly a quarter on the same period last year at 29,516, and were 3 per cent higher than the second quarter of this year.
http://business.timesonline.co.uk/tol/business/economics/article5204567.ece
November 21, 2008
TimesOnline
Repossessions in July, August and September jumped sharply by 12 per cent and, according to the Council of Mortgage Lenders, full year numbers are expected to soar by 70 per cent compared to 2007.
The number of repossessions that took place over the summer was 11,300, as an increasing number of homeowners are struggling to pay their mortgages. Today, the CML maintained its forecast that total repossessions for the year will reach 45,000, marking a 70 per cent increase on last year's total.
The latest figures from the CML also show that the number of mortgages in arrears by at least three months had jumped by 8 per cent.
The number of cases where people have fallen behind in their in mortgage repayments by the end of September was 168,000, with lenders now suggesting that the total number of mortgages in arrears is likely to surpass previous forecasts of 170,000 by the end of the year.
Michael Coogan, director general of CML, said: "Looking ahead, conditions in the wider economy suggest a worsening picture for mortgage arrears, however carefully lenders handle their treatment of borrowers in difficulty."
He called for the Government to step up its help for homeowners facing difficulties in Monday's pre-Budget report.
"Increased help with housing costs is needed for a wider range of borrowers facing unforeseen repayment difficulties where there would otherwise be little prospect of early improvement. Next week's pre-Budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited," he said.
Mortgage lenders were trying to constrain the level of repossessions, he said.
Simon Rubinsohn, RICS chief economist, said the latest figures demonstrated that the worsening economic climate was beginning to have a marked impact on both the levels of arrears and repossessions in the property market.
"With unemployment set to rise sharply as the recession bites, it is inevitable that both indicators will rise further in 2009," he said.
Buy-to-let mortgages, which had previously been performing well, have also seen a rapid deterioration in the three months to September.
This has been attributed to falling rents and an over-supply of properties in some areas, which means that landlords are unable to let their property or achieve high enough rents to support their borrowing commitments.
"Ominously, however, the buy to let market is now accounting for an increasing share of mortgage arrears. The latest RICS survey of the residential lettings market shows rents are now declining which, if persistent, could exacerbate the pain in this sector," Mr Rubinsohn said.
Fraud is also thought to have been a contributory factor in the worsening performance of buy-to-let loans.
A number of banks, notably Bradford & Bingley, have made provisions for fraudulent valuations. There have also been a number of police reports on the evidence of mortgage fraud by organised crime rings.
A spokeswoman for the CML said: "The issue of fraud in the buy-to-let sector has been well documented. This year we have worked closely with developers to make sure that there is full disclosure of incentives that they may be offering to try and combat this problem."
The problems of buy-to-let landlords have been compounded because it is now more difficult to sell as an exit strategy, while the availability of new buy-to-let mortgage finance has contracted sharply.
The CML believes that the relatively low rate of repossessions in the buy-to-let market is unlikely to continue in the future.
Figure from the Ministry of Justice, which reflect repossession actions in court, rose by 9 per cent compared with last year's figures at 38,511. The figure is higher than the CML's figure because not all court action results in an actual repossession.
Mortgage possession actions were up nearly a quarter on the same period last year at 29,516, and were 3 per cent higher than the second quarter of this year.
http://business.timesonline.co.uk/tol/business/economics/article5204567.ece
