Fewer Britons to lose homes in recession

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The Independent Online

The number of Britons whose homes are repossessed this year is likely to be dramatically lower than previously feared, the Council for Mortgage Lenders said yesterday.

The CML said it now expected there to be 48,000 repossessions during 2009, having begun the year with a prediction of 75,000. In June it cut this forecast to 65,000 – about the number seen annually at the height of the downturn in the early Nineties – but yesterday said that the latest arrears data suggested the actual total would be much lower.

Some 11,700 properties were repossessed during the third quarter of this year, marginally more than in the second quarter, the CML said. At the end of September around 195,000 mortgages were in arrears of 2.5 per cent or more of the total balance of the loan, down from 204,000 at the end of June.

Michael Coogan, the CML's director-general, said the lower-than- expected repossessions figures were partly a result of the historically low interest rates seen this year, as well as the more benevolent attitude of lenders.

"Low interest rates and lenders' forbearance policies have helped to cushion many households facing financial problems," Mr Coogan said. "Although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels most commentators now expect to persist."

The Government will claim some credit for the relatively low level of repossessions, having introduced new rules that prevent lenders taking possession of properties except as a last resort. However, Grant Shapps, the Conservatives' housing spokesman, criticised the £285m mortgage rescue scheme, launched by ministers earlier this year to aid homeowners in financial difficulties, which he claimed had helped just 92 families.

"Almost 11,000 people approached local authorities to seek help from Gordon Brown's delayed mortgage rescue scheme, but fewer than 100 families throughout England got any assistance," Mr Shapps said.

Yesterday's update on the housing market from the CML also revealed that buy-to-let mortgage lending has begun rising for the first time in two years. Parts of the buy-to-let market, in particular inner-city flats, have been particularly badly affected by falling property prices over the past 18 months, but the CML said advances to property investors rose by 10 per cent to £2.1bn during the third quarter of 2009.