CML ponders cutting repossessions forecast for 2010 to less than 53,000

The Council of Mortgage Lenders has hinted that it might lower its repossession forecast for 2010 after seeing lower than expected reposs-essions in Q4 2009.

Some 46,000 homes were repossessed in 2009, up from 40,000 in 2008 and the highest level since 1995.

But there were signs of improve-ment towards the end of the year. In Q4 some 10,200 properties were repossessed – 13% lower than in Q3 and 2% down on Q4 2008.

The CML dramatically cut its forecast for the number of reposs-essions in 2009 to 48,000 from an initial prediction of 75,000.

Looking ahead, the trade body says its 2010 forecast of 53,000 properties being repossessed may also be pessimistic as unemployment figures are better than expected, interest rates are still low, lenders have effective arrears management policies in place and government assistance schemes are also having an effect.

Repossessions among second charge lenders also fell in Q4 last year, figures from the Finance and Leasing Association show.

Second charge lenders reposs-essed 233 properties in Q4 – a 37% drop compared with Q4 2008.

But Moore Blatch’s latest repossessions report shows that 67% of lenders and experts are still predicting a rise in 2010 compared with last year.

Of this figure, half believe that repossessions will increase by as much as 5% while 17% believe a rise of between 5% and 15% will be seen. A further 6% foresee an increase of more than 15%.

Lenders cite excessive borrowing from other sources as the most likely cause of rising repossessions, with redundancy being the second biggest contributor, marital separation the third and interest rate rises the fourth.

Paul Walshe, head of lender services at Moore Blatch, says: “Sadly, excessive borrowing is still causing consumers to default on their mort-gages. This is one of the reasons we believe finance providers should take total borrowing into account before offering any money.”