Repossessions up 50% but outlook was ‘pessimistic’ says CML
18 May 2009 / by Rachael Stiles
The CML’s latest figures on repossessions reveal that 12,800 homeowners had their property repossessed in the first quarter, compared to 8,500 in quarter one 2008, and 10,400 in the fourth quarter of 2008.
But, despite the sobering results, the CML says that its previous prediction of 75,000 repossessions for 2009 was “pessimistic” and expects to revise the figure to a more optimistic one in its next housing forecast.
The CML believes that using the ‘number of months’ measure, which is used to evaluate when a borrower is in arrears, does not provide an accurate view of the market, because it is currently disproportionately affected by the very low interest rates. Therefore, it said, “It is more consistent to measure arrears as a percentage of the total outstanding mortgage balance.”
Commenting on the figures, director general of the CML, Michael Coogan, said: “Lenders are acutely conscious that behind the statistics are real people, many of whom are affected by the economic downturn and its impacts on unemployment, changes in circumstances and inability to refinance.”
Mr Coogan explained that mortgage lenders want to help borrowers to avoid repossession and are committed to working with their customers; this is illustrated by the figures which show that arrears have risen faster than repossessions, he said, with 62 per cent more homeowners in arrears in the first quarter of 2009 than during the same period in 2008.
“The key message continues to be: talk to your lender as soon as you identify difficulties emerging, and take advice from an independent money adviser if you have other debt issues as well as your mortgage. Lenders do not want to repossess if a realistic alternative solution can be found,” Mr Coogan stressed.
Commenting on the CML’s repossession figures, Louise Cuming, head of mortgages at moneysupermarket.com, said: “These figures highlight the commitment by lenders to work with borrowers to keep them in their homes wherever possible. Also, interest rates are now at an all time low which will be helping many borrowers meet their mortgage repayments, thus reducing the number of repossessions that would traditionally be expected in a recession and with this level of unemployment.
Ms Cuming also urges homeowners struggling with their mortgage payments to approach their lender as soon as possible, and recommends that lenders make it easier for borrowers by scrapping arrears fees until the worst of the recession is over.
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