Mortgage industry slashes repossessions forecast

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The Independent US

The mortgage industry slashed its forecast for repossessions today after a fall in the number of people losing their homes in the last quarter.

A total of 9,400 homes were repossessed during the three months to the end of June, down 400 from the previous quarter, and 2,400 below the figure for the same period of 2009, according to the Council of Mortgage Lenders (CML).

The figure led the CML to revise its forecast for total repossessions in 2010 as a whole - it now predicts 39,000 repossessions for the year, compared with the previous estimate of 53,000.

The number of mortgages behind with payments also fell. At the end of June there were 178,200 loans with arrears equivalent to 2.5% or more of their mortgage balance. This was 5% lower than at the end of March, and 17% lower than a year earlier.

The CML is expecting 175,000 mortgages to end the year 2.5% or more in arrears, compared with the previous forecast of 205,000.

Low interest rates, increased lender forbearance and the introduction of Government schemes to help people who are struggling to keep up with their mortgage have helped to reduce today's figures.

However, the CML warned that any hike in interest rates and a rise in unemployment could put borrowers in a precarious position, and urged the coalition government to maintain its support for homeowners.

CML director-general Michael Coogan said: "Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession."

However, he added: "While we don't want to cry wolf, it seems obvious that the ongoing prognosis for arrears and possessions is far from a healthy all-clear.

"We hope the coalition government will not risk undermining the chances of extending the welcome trends this year by removing support mechanisms that work."

The Ministry of Justice also released figures today which showed a fall in the number of repossession orders made by courts in England and Wales.

A total of 17,774 mortgage repossession claims were issued in the second quarter of 2010, on a seasonally adjusted basis, 5% lower than the previous quarter, and 30% lower than the same period in 2009.

This led to 13,389 repossession orders being made, 7% fewer than in the first quarter of 2010 and 29% lower than in the second quarter of 2009.