Mortgage News Repossessions To Hit 75000 In 2009 'however Hard The Government Works' 2676
Repossessions to hit 75,000 in 2009 ‘however hard the Government works’
19 December 2008 / by Rachael Stiles
In its forecasts for 2009, the CML’s outlook is bleak, foreseeing that mortgage arrears will be pushed up by rising unemployment caused by the economic recession.
Homeowners who are on variable rate deals will be enjoying cheaper interest rates if they can manage to stay in employment, but consumer confidence will prove to be as much of a barrier as the cost of borrowing, it said.
The CML accused the Government of not acting quickly enough to stave off a recession.
The housing market has been on the frontlines, bearing the brunt of the problems, and a dramatic improvement is not expected next year against a weak economy and lack of available lending.
The representative of UK mortgage lenders predicts that 2009 will see around 700,000 housing transactions, 200,000 fewer than this year, and down from 1.6 million in 2007.
Gross mortgage lending will fall to £145billion, down from £258billion in 2008, and less than half of 2007’s lending which totalled £363billion.
And net lending will paint an even bleaker picture of the lending market, with homeowners repaying a higher level of existing mortgage debt than they will borrow on new mortgages.
Lower consumer demand, continuing restraints on the availability of credit, more prudent lending practices and the banks’ ongoing balancing act between savers, borrowers, new borrowers and tighter management of their balance sheets are all conspiring to make for a difficult year, the statement said.
By the end of 2008, the CML predicts that 21,000 UK households will be more than three months behind on mortgage payments, which will increase to 500,000 by this time next year, amounting to a total of around 75,000 repossessions by the end of 2009.
While lenders are “committed to ensuring that repossession is avoided where possible” the CML added, “the worsening economic backdrop does point towards an inevitable increase in the number of cases where a sustainable alternative solution cannot be found.”
“Britain is now sliding ever more quickly into the dark days of the 1990s housing recession while lenders and the Government stand by and watch.” said Adam Sampson, chief executive of housing charity Shelter.
“Lenders must use repossession as a last resort by giving borrowers the chance of mortgage holidays, changing to interest only payments, moving to a different lower rate mortgage or working out a better payment plan.”
Commenting on the CML’s forecast, Louise Cuming, head of mortgages at moneysupermarket.com, said: “Homeowners have every right to be nervous as the prospect of losing their homes becomes a reality for so many people next year.
“A sad part of this is that lenders are still taking the opportunity to levy hefty charges when borrowers go into arrears.
“Given the dire state of the economy and the fact many more people are under financial pressure, providers should cut arrears fees if they want to prove a real commitment to supporting struggling customers.”
© Fair Investment Company Ltd