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Repossessions still at very low levels, says RICS

Royal Institution of Chartered Surveyors says the number of repossessions are still at low levels following figures released by the Council of Mortgage Lenders.

The CML figures revealed that the number of properties taken into possession in the first half of this year was 76% higher than the same period last year.

David Stubbs, RICS economist, says: While the number of properties taken into possession was the highest since the first half of 2001, it is still very low level compared with the number being possessed during the early nineties, the highest being 38,930 in the second half of 1991.

Indeed, the number of properties possessed as a percentage of outstanding mortgages, at 0.07%, is very minor compared with the 0.4% in the second half of 1991.

Although the number of possessions has risen 171% since the second half of 2004, the rate of increase may slow in the coming six months.

More figures from the CML show that the percentage of mortgages that are in arrears has stabilised at just under 1%.

This ends three consecutive quarters of increases which led to a cumulative increase of 26% between 2004 H1 and 2005 H2.

Further signs that the pressure in the possession pipeline is levelling off comes from another set of figures released today by the Department and Constitutional Affairs.

These showed that showed that the number of households in England and Wales in the early stages of the repossession process fell slightly in second quarter of 2006, which is the first fall in two years.

Actions entered by lenders, the first stage of repossession, fell 0.8% from the level in the first quarter to 33,180 but are still up 17% from the same period last year.

While there is not a direct relationship between the numbers entering these early stages of repossession and the actual numbers of houses possessed in future periods, it is none-the-less encouraging that the numbers of people entering these early stages have now stabilised.

That these numbers have stooped rising is testament to the recovery in the economy, the strong growth in jobs and last August’s interest rate cut.

Yesterday’s interest rate rise is a timely reminder that household finances could come under renewed pressure.

Despite the recent popularity of fixed rate mortgages, the majority of the stock of outstanding mortgages in the UK are variable rate mortgages and therefore leave their owners vulnerable to higher interest payments.

If, as the RICS believes, this is not an isolated rise in interest rates, it is certain that the number of households unable to meet their mortgage payments will continue to trend higher.

“However, solid economic performance will prevent a return to the levels seen in the early nineties.

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