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

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Analyst - (Active Directory, Support, London)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...

Junior Quant Analyst - C++, Boost, Data Mining

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Junior Quant Analyst (Machine Learning, SQL, VBA)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition