Worst case scenario warns of repossessions hike

Home repossessions could soar to 175,000 in 2012 if the Government fails to tackle the UK's deficit, it was warned today.

The figure represents a "doomsday scenario" under which unemployment peaks at 11.4% in 2011 and interest rates rise rapidly, possibly due to a sovereign debt crisis.



But the report, which was commissioned under the Labour government but never published, stressed the scenario was unlikely to happen.



It added that if unemployment fell rapidly after the first quarter of next year, interest rates remained low and house prices rose sharply, it was possible fewer than 33,000 homes would be repossessed during 2012.



Overall, the report found the combination of greater tolerance from lenders and the help available to homeowners through Government schemes had had a notable effect in keeping repossession numbers down.



But it warned the risk of increased numbers of repossessions would remain high in the years ahead.



The study, by Professor John Muellbauer and Dr Janine Aron of Oxford University, was published as housing minister Grant Shapps said schemes introduced by the previous Government to help homeowners struggling with their mortgage would be maintained.



The Homeowners Mortgage Support Scheme, under which people who experience a sudden loss in their income can defer interest payments on up to 70% of their mortgage for two years, will run until April 2011 as previously planned.



The scheme, which was launch by then the housing minister Margaret Beckett in April 2009, has come in for criticism after many lenders failed to sign up to it, while it helped only 34 households in the first year after it was launched.



But despite this, the report said it had helped to reduce repossessions by encouraging greater lender forbearance.



Mr Shapps said the Mortgage Rescue Scheme, under which vulnerable households can sell some or all of their property to a registered social landlord and rent it back again, would also continue until the spending review in October.



But in order to ensure that the funding lasts, the Government is reducing the grant it gives housing associations towards the purchase price of a property from 65% to 55%.



It is also introducing tighter caps on property price and repair costs.



The Department for Communities and Local Government will also step up work with organisations such as Citizens Advice and Shelter - as well as Martin Lewis, creator of MoneySavingExpert.com - to promote the help available to struggling homeowners.



Mr Shapps said: "The most effective thing the Government can do for homeowners is to tackle the record deficit and avoid the need for rapid increases in interest rates.



"But there must still be effective help on hand for those struggling to pay their mortgages."



The Council of Mortgage Lenders has forecast that 53,000 people will lose their homes in 2010, although it recently said the figure may be too pessimistic.



However, while it has not issued forecasts for the years ahead, it has indicated that it expects repossessions to remain at around this level for several years.

Independent Comment
blog comments powered by Disqus
Finacial products from our partners
Property search
News in pictures
World news in pictures
       
 

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    iJobs Job Widget
    iJobs Money & Business

    Senior Investment Manager - Renewable Energy

    £65000 - £85000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

    Snr Business Analyst - Banking - Bristol - £585pd

    £400 per day: Orgtel: A top tier banking client urgently requires a Senior Bus...

    Financial Crime Analyst,Midlands, £250-350PD

    £250 - £350 per day: Orgtel: Financial Crime Analyst,Midlands, Banking, AML/Sa...

    Graduate Trainee – Recruitment Consultant

    £20,000 - £45,000 OTE: Co-Venture: Working for this company will give you a ch...

    Day In a Page

    'To farm I have to rape the countryside. It’s got to be wrong': The true effect of the badger cull

    The true effect of the badger cull

    'To farm I have to rape the countryside. It’s got to be wrong'
    Theatre review: Daniel Radcliffe gives an admirably honest performance in Michael Grandage's The Cripple of Inishmaan

    First night: The Cripple of Inishmaan

    Daniel Radcliffe gives an admirably honest performance in Michael Grandage's comedy
    Girls Guides drop religious reference but pledge to self and the Queen

    Guides drop religious reference but pledge to self and the Queen

    After 103 years, organisation changes oath to welcome 'all girls, of all faiths, and none'
    Steve Tongue: Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago

    Steve Tongue

    Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago
    Chris Froome: Free from 'pain in neck' after Bradley Wiggins' exit

    Chris Froome: Free from 'pain in neck' after Wiggins' exit

    Sky's lead rider says he is in fantastic form for the Tour and happy pecking order debate is over
    Hannah England: I've got the right times – now to focus on the chess

    Hannah England: Keeping Track

    I've got the right times – now to focus on the chess
    Beards, brawn and body art

    Beards, brawn and body art

    Meet London’s new batch of male models
    Scandi-geeks descend on Nordicana for fan-convention

    Scandi-geeks descend on Nordicana for fan-convention

    British love of shows such as The Bridge, Borgen and The Killing shows no sign of fading
    Behind the rhetoric what is really being done to combat desertification?

    The Great Green Wall of Africa,

    Behind the rhetoric what is really being done to combat desertification?
    Laughter Inc: the cheering growth of the chuckle industry

    Laughter Inc

    The cheering growth of the chuckle industry
    The bad science scandal: how fact-fabrication is damaging UK's global name for research

    The bad science scandal

    How fact-fabrication is damaging UK's global name for research
    To the manor born: The female aristocrats battling to inherit the title

    Female aristocrats battle to inherit the title

    A passionate protest is gathering pace among the women of Britain's aristocracy, who believe that men should no longer automatically inherit the family pile and title.
    Love struck: Photographs of JFK's visit to Berlin 50 years ago reveal a nation instantly smitten

    In pictures: JFK's visit to Berlin in 1963

    Photographer Ulrich Mack accompanied Kennedy on the entire trip. The results are an astonishing record of a watershed moment.
    Eat shoots and leaves: Mark Hix gets creative with fresh peas, mangetouts and sugar snaps

    Mark Hix gets creative with English peas

    English peas and their offsprings, such as mangetouts and sugar snaps, are great tossed into a salad, says our chef.
    Ceviche with a smile: Chef Martin Morales has turned South America's elegant cuisine into one of London's hottest food trends

    Chef Martin Morales: Ceviche with a smile

    Morales has turned South America's elegant cuisine into one of London's hottest food trends