Repossessions are likely to hit 70,000 next year as the mortgage market looks set to continue its downward trend, research from Hometrack has revealed.
The research found that repossessions will equate to 0.59 per cent of all outstanding loans in 2009, compared to a high of 0.69 per cent in 1991, as mortgage
holders struggle to meet repayments.
And, as borrowers struggle, mortgage lenders
are expected to constrict the amount of mortgage credit on offer from £39billion in 2008 to £15billion in 2009.
Commenting, Gary Styles, Hometrack's strategy, risk and economics director, said: "The economic shocks that hit the economy during 2008, namely oil and food prices combined with the collapse of the world economy would have changed the direction of the market on their own. However, the ensuing financial collapse of lenders has compounded the required supply adjustment.
"2009 will be a very difficult year for all lenders, he added: "The speed of recovery in the medium term will in part depend on how quickly the major lenders can adjust their balance sheets for the new economic climate and more importantly whether one or two major players can take on the mantle as market leader and drive the market to higher volumes in the medium term."
The research coincides with the Council of Mortgage Lenders' (CML
) earlier forecasts for 2009. Although the lenders' body said the predictions could only be indicative because of market volatility, CML director general Michael Coogan said last week:
"In looking ahead to the coming year, the housing market will remain extremely subdued and the net mortgage lending is likely to turn negative."
Commenting on repossession statistics, he added: "Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers."
© Fair Investment