The dire forecasts said repossessions would be higher than in the early 1990s. They are now likely to be about half the level seen then. Crisis over?
As house prices plummeted through 2008 and into 2009, repossessions started to climb and the Council of Mortgage Lenders (CML) forecast they would reach 75,000 in 2009 - only just short of the worst ever total in 1991.
That would have been a political disaster for the government and a PR disaster for the banks and prompted action on a wide range of fronts: an improved safety net; a pre-action protocol; new support schemes; and increased forebearance measures.
Above all, record low interest rates reduced monthly payments for borrowers in trouble.Compared to those worst fears, the results are a triumph. Lenders repossessed not 75,000 families but 48,000 in 2009 and the CML now forecasts the total will fall to 39,000 in 2010 against the 53,000 it expected at the start of the year.
In the meantime, the coalition government has begun to dismantle much of the safety net and many of the support measures introduced by Labour. The CML published second quarter figures yesterday showing that repossessions were down 4% on the previous quarter and 21% on a year ago.
The number of mortgages more than three months in arrears showed similar falls. But it also warned there is no room for complacency. The number of people with low level of arrears has fallen quite rapidly but the number with arrears worth more than 10% of there mortgage barely fell at all.
The danger is that many repossessions have just been postponed and that totals could remain high for several years. If the total starts to rise again as public spending cuts bite, then the political risks for the coalition are obvious.
Yet it’s hard to justify maintaining help for homeowners at a time when tenants are about to go through draconian cuts in housing benefit.
As Michael Coogan, director general of the CML, puts it: ‘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.’
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Readers' comments (3)
Anonymous | 13/08/2010 5:10 pm
As Michael Coogan, director general of the CML, puts it: '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.'
And you base this hope on what evidence - some hope. The coalition needs to create as many empty homes as possible for their PSL cronnies to buy on the cheap and rent out on the backs of tax-payer funding.
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Anonymous | 16/08/2010 3:31 pm
"Yet it’s hard to justify maintaining help for homeowners at a time when tenants are about to go through draconian cuts in housing benefit."
Why is it hard to justify helping homeowners for a short period? HB claimants are helped with housing costs for years on end, sometimes for their whole lives!!!!
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Sidney Webb | 16/08/2010 3:39 pm
Nobody gains if we elect to punish one group justified by the punishment of another group. Better to punish neither and promote positive support for all.
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