Glass half-full: repossessions figures are again lower than lenders expected. Glass half-empty: repossessions are up 15% to their highest level for 15 years.
For a year now it’s been impossible not to take a twin-track approach when the Council of Mortgage Lenders releases its figures. At the end of 2008 it forecast that 75,000 families would lose their homes. That was political dynamite since it would mean repossessions in 2009 (the year before an election) would match the worst year of the early 1990s crash.
By June it was clear that estimate was too high. A combination of ultra-low interest rates, ministerial arm-twisting, lender forbearance, mortgage rescue schemes and hundreds of billions of pounds worth of government support schemes for the financial and mortgage markets meant the CML revised its forecast down to 65,000.
Lower than expected third quarter figures meant it was revised down again to 48,000 in November. And this morning the CML not only revealed a full year total that was 2,000 lower than that, but added that its 53,000 forecast for 2010 was looking too high as well.
The same was true for arrears and the 188,300 families behind with their mortgage by more than 2.5% of the balance. That was lower than the CML forecast and compares with more than 400,000 in 1994, the earliest year for which figures are available on that basis.
Yet, as the CML points out, there are two views to take of arrears. Lower levels of arrears - those worth up to 5% of the balance - are actually going down whereas the number of people with arrears of mote than 5% is going up. ‘This suggests that at present some borrowers facing only modest difficulties are being helped by low interest rates to get back out of trouble, whereas those with more severe problems may be stabilising their arrears but not recovering from them, and lender forbearance is likely to be a significant factor keeping them in their homes,’ it comments.
Which brings me neatly back to that twin-track approach. Anecdotal evidence suggests that different kinds of lenders are taking very different approaches to people in arrears and repossessions. For mainstream lenders it makes more financial sense to keep people in their homes, and even to write off some arrears, than to saddle themselves with repossessed property for distressed sale. Meanwhile sub-prime lenders want what they can get and they want it now.
That might part of the explanation for another double-edged comparison. In 1995 there was one repossession for every eight households with arrears of more than 2.5% of their mortgage. In 2009, despite all that apparent lender forbearance, there was one for every four.
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