Repossessions at lowest level since 2007

 

Record low interest rates have helped push the number of repossessions in the UK to the lowest level since 2007, but they are set to soar to 45,000 by the end of the year as unemployment worsens, lenders warned today.

Some 36,200 properties were repossessed in 2011, around 4,000 fewer than had previously been forecast, but continued pressures on living costs are likely to drive the figure back up this year, the Council of Mortgage Lenders (CML) said.

The body put 2011's lower-than-expected results down to interest rates, as the Bank of England maintains the base rate at a historic 0.5% low, as well as lenders' forbearance.

The CML said lenders have been reducing rates temporarily or switching them to interest-only mortgages to help borrowers, as well as extending the dates for when payments are due.

Recent research from Halifax found that mortgage payments for new borrowers have reached their most affordable levels for 14 years, with average payments standing at 27% of disposable earnings, well below the 37% long-term average.

But as consumers come under more pressure, the CML predicts that 180,000 mortgages will be in arrears of 2.5% or more of the mortgage balance by the end of 2012, up from 159,400 at the end of last year.

Around 8,500 properties were repossessed in the fourth quarter of the year, down by 9% from the previous quarter.

CML director general Paul Smee said: "Low interest rates and good arrears management by lenders are helping the vast majority of those borrowers who face difficulties to keep their homes and get back on track.

"This will continue, but in the face of wider economic difficulties and rising unemployment, we are concerned that there will be a higher number of people facing more serious problems in 2012."

Buy-to-let properties accounted for 5,900 of the repossessions in 2011, up from 4,700 in 2010, but arrears rates tended to be lower than in the owner-occupier sector, suggesting greater leniency is being shown to owner-occupiers.

There has been a renewed interest in the buy-to-let market as the rental market saw a boom last year due to the numbers of would-be buyers unable to get on the property ladder, and lenders have been expanding their ranges to attract landlords.

Paul Diggle, a property economist at Capital Economics, said: "The implication seems to be that forbearance is less common for landlords.

"But if banks become unwilling or unable to maintain their lenient approach with owner-occupiers, this would only exacerbate the impact of the weak economy."

The Bank of England has said it expects lenders to tighten their credit criteria this year amid wider economic uncertainty and the fallout from the eurozone crisis.

Despite the number of cheap loans around, analysts have pointed to a general trend of consumers lacking the appetite to borrow amid concerns over jobs.

A recent PricewaterhouseCoopers (PwC) report found that UK families are typically £7,900 in debt from personal loans, overdrafts and credit cards, despite three years of paying them down. The report said UK households remain "among the most indebted in the world".

Mr Diggle said: "Mortgage borrowers have been helped by continued low interest rates, widespread lender forbearance and a labour market that did not get materially worse in 2011.

But he said it was "difficult to envisage a repeat performance" of the low figures in 2012.

The Ministry of Justice also released figures today which showed a slight rise in repossession claims made in the courts in England and Wales in the last three months of 2011, while the number of orders granted fell.

There were 17,890 claims issued in the courts in the fourth quarter of last year, a 1% rise on the previous quarter.

This led to 13,607 repossession orders being made, 2% lower than in the third quarter of 2011. Around 49% of the orders were suspended.

Suspension usually requires the defendant to pay the latest instalment of cash owed, plus some arrears, within a certain period. As long as they comply, the possession order cannot be enforced.

The report said the figures generally have remained "reasonably stable" for the last two years.

The North West had the highest numbers of mortgage claims and claims leading to orders per 1,000 households, reflecting suggestions that northern regions have borne the brunt of economic problems. The lowest numbers were in the South West.

PA

Life and Style
A teenager boy wakes up.
life
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Life and Style
tech
Extras
indybest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Java Developer - web services, XML and API

£330 - £350 Per Day: Clearwater People Solutions Ltd: Our client based in Lond...

Primary teachers required for schools in Norwich

£21000 - £35000 per annum: Randstad Education Cambridge: Primary teachers requ...

Trainee Helpdesk Analyst / 1st Line Application Support Analyst

£18000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

Data Analyst / Marketing Database Analyst

£24000 per annum: Ashdown Group: An established and growing IT Consultancy fir...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style