Repossessions 11% lower than expected last year, says Council of Mortgage Lenders

20 February 2009 / by Rachael Stiles
There were 40,000 homes repossessed in 2008, up sharply from 2007 figures, but 11 per cent lower than last year's predictions.

According to new data from the Council of Mortgage Lenders (CML), the fourth quarter of 2008 saw 10,400 repossessions, significantly more than were recorded for the same period in 2007, where 6,900 homes were repossessed, but last year, the CML's forecast was even bleaker, expecting 45,000 repossession for 2008.

The better-than-expected results show that while repossessions were "unsurprisingly" up on the previous year, mortgage lenders made a "strenuous efforts" to ensure that repossessions was only used as a last resort, the CML says, adding that the figures include not only home-owner repossessions but also buy-to-let, abandoned properties, and instances of property fraud.

The CML said that in the majority of cases where the mortgage holder is committed to working with their lender in order to remain in their home this is successfully achieved.

"Despite the upward pressure on mortgage arrears and repossessions arising from the problems in the economy and rising unemployment, both lenders and government are continuing to find more ways to help more people stay in their homes." said CML director general, Michael Coogan.

"Lenders work hard to help wherever the household's future prospects look feasible", the CML said, while new measures from the Government have also helped people remain in their homes when their problems are too severe to be resolved by the lender.

The Mortgage Rescue Scheme has seen housing associations taking part equity in people's homes or buying them outright so that the mortgage holder can continue living there. The Home-owner Mortgage Support Scheme, to be rolled out imminently, will allow borrowers to underpay, by the Government guaranteeing part of the increased risk to lenders, encouraging them to show their customers more forbearance for longer before taking possession of their home.

Mr Coogan said that "there seems to be a sharp rise in cases where borrowers are handing back their keys or abandoning their properties." The CML urges them to get in touch with their lender and try to negotiate a different solution with them before taking this step, he said. "Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests."

"We know the plethora of schemes and initiatives is daunting, and we are working closely with government and advice agencies to try to simplify the information available, and ensure that those borrowers who may qualify for help get access to the information and advice that they need at the right time."

The CML predicts that 500,000 homeowners will fall behind on their mortgage payments this year, and its predicted level of repossessions for 2009 remains unchanged at 75,000.

But the Government is expected to announce further measures today to stem the flow of repossessions and protect homeowners from the combination of falling house prices and rising unemployment.

Ministers are expected promise £500million to struggling homeowners, in the form of its Mortgage Support Scheme, which will allow borrowers to defer payments on up to 70 per cent of their mortgage interest for up to two years, it will be revealed today, the Guardian reports.

The Government will also agree to guarantee up to 80 per cent of the property's value if it is repossessed and sold at a loss to the lender, which will be able to claim compensation from the Treasury.

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