Home repossessions jump by 50 per cent
Lending body set to revise down prediction of 75,000 repossessions this year
Saturday 16 May 2009
The number of Britons evicted from their homes soared 50 per cent to 12,800 in the first quarter, but experts now believe repossessions will not reach the levels of the early 1990s.
The Council of Mortgage Lenders (CML) yesterday reported repossessions by first-charge lenders had risen by half at the start of the year from 8,500 in the first three months of 2008.
Sarah Teather, the Liberal Democrat housing spokeswoman, said the figures made for "grim reading".
Repossessions were still rising, the CML admitted, but it said its previous forecast of 75,000 "looks pessimistic for the year as a whole", adding that it expected to revise the figure downwards in its next housing market forecast update. Last year, 40,000 homes were repossessed, a 12-year high.
The CML credited legislation enacted by the Government for helping out beleaguered homeowners, and backed it to slow the rate of evictions. The initiatives included the mortgage rescue and the home-owner mortgage support schemes.
The Ministry of Justice yesterday released numbers of its own, backing the Government's initiatives. Mortgage possession orders fell to 17,054 in the first quarter, 39 per cent lower than the corresponding period in 2008. Almost half of those orders were suspended. However, petitions to have companies wound up rose 13.3 per cent to 3,461.
The Royal Institution of Chartered Surveyors' (Rics) chief economist, Simon Rubinsohn, said the data from the CML and Ministry of Justice "provides further evidence that government policies are working".
He said that as the schemes have "a meaningful impact" in the next few months, the number of homes repossessed would fall "some way short of the widely predicted estimate of 75,000". Rics said the figure could be as low as 50,000. The previous peak was in 1991, with 75,500 repossessions.
Howard Archer, an economist at Global Insight, failed to be caught up in the optimism. "Unfortunately, home repossessions and individual bankruptcies still seem likely to rise significantly further," he said, adding: "Furthermore, we suspect that the economy is highly likely to suffer relapses and doubt that sustainable recovery will develop until 2010."
The CML also reported that the number of mortgages in arrears continued to rise "on all measures". The number of those with arrears of more than 2.5 per cent of the mortgage balance was almost two-thirds higher at 205,300, up from 127,000.
Michael Coogan, the CML's director general, said the lenders had worked hard to avoid evictions. "It is quite clear that the number of arrears cases is rising far more markedly than the number of repossessions," he said.
"Lenders are demonstrably increasing the forbearance they are offering, while many struggling borrowers have gained some breathing space through lower interest rates feeding through to lower monthly payments."
He continued: "Lenders are acutely conscious that behind the statistics are real people."
Sam Younger, chief executive of the homelessness charity Shelter, said the CML figures "paint a very depressing picture" and added "some lenders are clearly still not doing everything they can to keep people in their homes".
Personal bankruptcy filings soar by 29%
Petitions for personal bankruptcy and company winding-up orders soared in the first quarter of this year as the recession exacted a heavy toll. Individual bankruptcy proceedings jumped by 29 per cent to 16,775, while corporate winding-up petitions rose by 13 per cent to 3,461 in the three months to 31 March, said the Ministry of Justice. Nick Hood, a partner at the restructuring specialist Begbies Traynor, said: "The difficulties facing both individuals and companies are continuing, with rising unemployment, falling house prices, depressed consumer demand and lack of credit all bearing down on their ability to survive in the current harsh conditions." However, bankruptcy petitions issued by corporate creditors actually fell by 5 per cent to 4,535 in the quarter, suggesting banks are becoming more lenient towards companies in trouble.
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