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

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Games Developer - HTML5

£28000 - £45000 per annum: Recruitment Genius: With extensive experience and a...

Recruitment Genius: Personal Tax Senior

£26000 - £34000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Assistant Product Manager

Negotiable: Recruitment Genius: Due to on-going expansion, this leading provid...

Recruitment Genius: Shift Leaders - Front of House Staff - Full Time and Part Time

£6 - £8 per hour: Recruitment Genius: This is an opportunity to join a family ...

Day In a Page

A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
Philae lander data show comets could have brought 'building blocks of life' to Earth

Philae lander data show comets could have brought 'building blocks of life' to Earth

Icy dust layer holds organic compounds similar to those found in living organisms
What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories

What turns someone into a conspiracy theorist?

Study to look at why some are more 'receptive' to such theories
Chinese web dissenters using coded language to dodge censorship filters and vent frustration at government

Are you a 50-center?

Decoding the Chinese web dissenters
The Beatles film Help, released 50 years ago, signalled the birth of the 'metrosexual' man

Help signalled birth of 'metrosexual' man

The Beatles' moptop haircuts and dandified fashion introduced a new style for the modern Englishman, says Martin King
Hollywood's new diet: Has LA stolen New York's crown as the ultimate foodie trend-setter?

Hollywood's new diet trends

Has LA stolen New York's crown as the ultimate foodie trend-setter?
6 best recipe files

6 best recipe files

Get organised like a Bake Off champion and put all your show-stopping recipes in one place
Ashes 2015: Steven Finn goes from being unselectable to simply unplayable

Finn goes from being unselectable to simply unplayable

Middlesex bowler claims Ashes hat-trick of Clarke, Voges and Marsh
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Atwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works