Repossessions fall - but is this the calm before the storm?
The Council of Mortgage Lenders (CML) today announced a decline in the number of housed repossessed by mortgage lenders in the second quarter of 2010. In the three months to the end of June, there were 9.400 repossessions, down from 9,800 in the previous quarter and considerably below the same quarter last year, when 11,800 properties were taken back by first charge mortgage lenders.
As a result, the CML have revised down their forecasts for repossessions in 2010 as a whole from 53,000 to 39,000, a reduction of around 25%.
The number of mortgages in arrears has also reduced, with 178,200 mortgages in arrears equivalent to 2.5% or more of the mortgage balance. This is 5% lower than at the end of March and a whopping 17% lower than the same period last year.
These figures have surprised many in the industry, with mortgage difficulties being contained below the levels that the CML expected at the start of the year, and in comparison to the recession at the start of the 1990s.
I don’t want to be accused of talking down this good news. But I’m afraid that this is just a lull, an aberration, before things get worse. There are some important factors that make this downturn different to the 1990s recession. Firstly, the headline interest rate is at an historic low: at some stage, rates will start to increase and many homeowners who are currently struggling to keep their heads above water will sink beneath the waves. Secondly, the Government is struggling to cope with crippling levels of debt and has indicated that wide-ranging cuts in public spending will be used to help balance the books. Nobody knows for certain what the effects of those cuts will be, but rising unemployment and increased job insecurity will surely become a reality for many more homeowners in the months and years to come.
If you have financial problems and are worried about how this will affect your home, call me today on 01709 331300 for a free, no-obligation and confidential chat.