Home repossessions predicted to rise


The Council of Mortgage Lenders (CML) has predicted a 20% increase in home repossessions in 2012 despite the fact that they fell in the first half of the year.

The number of repossessions until June 2012 came to 18,100 compared to 18,900 in the same period of 2011.   However, the CML has stood by its predictions of a 20% increase to 45,000 for the year.

Repossessions have been declining over the past few years as more is done to ensure residential home owners retain their properties and they made up just 0.16% of all properties under mortgage in the first six months of 2012.  

However, due to the tough economic climate, the CML has said that they expect home owners to struggle this year despite the fact that interest rates remain low.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said:  "Mortgage rates continue to rise, despite the non-movement of base rate, with more than a million home owners seeing an increase in mortgage rates in May, for example. Those with little or no equity in their homes don't have the luxury of being able to remortgage onto a cheaper deal."

Mr Harris called on lenders to act responsibly by saying; "It is essential that lenders continue to show forbearance and look after customers who are struggling by switching them to interest only, allowing them to take payment holidays or extend their mortgage terms, where practical.”

The CML's director general Paul Smee urged anyone worried about their mortgage to talk to their lender as soon as possible and seek help before they miss a payment.  He also reminded them they could contact free debt agencies, such as Citizens Advice Bureau.'

More than a million home owners saw their mortgage rates rise in May, following a string of increases announced by lenders, blaming the weak economy and the increased funding costs.

Lenders have also been tightening their borrowing criteria in recent months, causing a drop in the proportion of mortgage approvals, making it tougher for people to get a mortgage or switch to a cheaper deal.

The CML has called for the Government to extend some temporary benefit arrangements for at least another year to help those who are struggling.

It said that repossessions have so far been kept down to a much greater extent than predicted due to the Support for Mortgage Interest (SMI) scheme, which helps those who are having trouble with their mortgage payments.

The body has said the decision to offer SMI on more generous terms, which are due to be scaled back next year, has helped nearly 250,000 people to remain in their homes at any one time.

 The Government has said the SMI payments system, which costs £400 million a year, is not sustainable.

 


  • Date posted:
    13/08/2012
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