CML slashes repossessions forecast to 48,000

12 November 2009 | By Natalie Thomas

In last year’s housing market forecasts the CML predicted that there would be 75,000 repossessions in 2009.

The forecast was revised down to 65,000 in June, but has now been cut again as a result of lender forbearance, government measures and continuing low interest rates.

Latest figures from the CML show that in Q3 the number and proportion of mortgages in arrears both fell.

As at the end of September 194,600 mortgages, 1.77% of the total, were in arrears of 2.5% or more of the outstanding mortgage balance.

This compares with 204,200 cases, or 1.86% of all mortgages, at the end of June.
 
But the number of repossessions has increased slightly, going from 11,400 in Q2 to 11,700 in Q3.

The current level of repossessions is 5% higher than recorded for Q3 2008, but remains lower than the 12,700 repossessions in Q1.

The CML says around a quarter of the possessions in Q3 took place without a court order, similar to the proportion in the previous three months.

The trade body has also published revised 2009 mortgage market forecasts and new forecasts for 2010.

It forecasts that:

• The number of housing transactions will reach 810,000 this year and 850,000 next year
• Gross lending will total around £141bn this year and £150bn next year
• Net lending will be modestly positive this year at £8bn (revised from a negative expectation of -£5bn previously), and £15bn next year
• Assuming interest rates remain at their current low levels, the number of mortgages 2.5% of balance or more in arrears will end the year at 195,000 (down from previous forecast of 360,000), and will rise only modestly next year to 205,000.
• The number of repossessions this year will total around 48,000 (0.43% of all mortgages) and around 53,000 (0.48%) next year.

Michael Coogan, director-general of the CML, says: “We are glad to have been wrong on our previous forecast for mortgage repossessions this year.

“Although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time.”

On the CML’s lending forecasts for next year, he says the trade body is predicting a modest increase rather than a dramatic upturn.

Coogan adds: “There is a risk that public spending cuts and higher taxes could choke off recovery.

“Although we have become more optimistic, we remain cautious about market prospects.”

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