Repossession fall attributed to court delays

Figures from the Financial Services Authority show new cases of possession fell 9 per cent between Q1 and Q2, dropping from 14,884 to 13,610.

The FSA said the change might reflect low interest rates and a more cautious approach from lenders. But it also warned it might be due to administrative changes creating a backlog of cases in the courts.

Its concern was echoed by the Royal Institution of Chartered Surveyors. Chief economist Brigid O’Leary said: ‘It is possible that the government’s mortgage pre-action protocol is simply delaying the issue of possession orders, in which case the data in the second half of this year could paint a gloomier picture.’

Despite the drop, repossessions are still up 23 per cent on the same period of 2008. The total number of arrears cases is also up 30 per cent on the previous year, although the number of new cases dropped 14 per cent from 60,000 to 51,000 between Q1 and Q2.

The FSA figures also suggest the housing market is picking up, with a 41 per cent increase in the value of advances for home purchase between Q1 and Q2, to £17 billion. This is down 47 per cent on the previous year.

Figures published yesterday by the Council of Mortgage Lenders showed lending for house buying increased in July for the first time since early 2007.

The umbrella group for lenders said there were 56,000 house purchase loans made in July 2009 totalling £7.5 billion. This was up 24 per cent from the month before and up 47,000 – 19 per cent – from loans totalling £7.1 billion in July last year.

The value of house purchase loans was also up 27 per cent in July from June this year, and 6 per cent from July 2008.

The CML found more loans were made to home movers in July than in June, when the largest rise was seen in first-time buyer activity.

There were 20,400 first-time buyer loans and 35,700 home mover loans in July 2009, up 18 per cent and 28 per cent respectively on June.

But CML economist Paul Samter warned: ‘It’s tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing.

‘But there are still constraints affecting the lending industry’s capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being.

‘The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.’

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