View more on these topics

67% of lenders expect rise in repossessions

The latest annual Moore Blatch 2010 repossessions report, reveals that 67% of mortgage lenders and repossession experts are predicting an increase in the number of repossessions in 2010.

Moore Blatch found of the 67% of mortgage lenders predicting an increase in repossessions, 50% believe repossessions will rise by as much as 5% while 17% believe a rise of between 5-15% and a further 6% foresee a rise in repossessions of over 15%.

Some 28% of lenders thought there would be no change in repossessions in 2010, while 6% believe there will be a decrease.

The lenders cited excessive borrowing from other sources as the main cause of increasing repossessions, with redundancy the second contributor, marital/partner separation as the third biggest contributor and interest rate rises as the fourth biggest contributor.

Paul Walshe, head of lender services, Moore Blatch, says: “The Council of Mortgage Lenders revised, and subsequently lowered their 2009 predictions for repossessions from 75,000 down to 48,000.

“However, much of this fall was due to the implementation of a government initiative to provide consistency in lenders’ approach to repossessions; the Pre Action Protocol, as it is known. This created a bottleneck which will start to clear in 2010.

“Sadly, the underlying cause of repossession being excessive borrowing, is still causing people to default on their mortgages.

“This is one of the reasons why we believe that all providers of finance, whether, mortgages, credit cards, car loan or any other source, should have to take into account total borrowing before offering any money, as it is often secondary borrowing that tips people over the edge, and into losing their home.”



Time to revive the industry

With the closing date for submissions to the Mortgage Market Review now passed, for those keen to influence the thinking of the Financial Services Authority the real work starts now. As our lead story on page 4 this week explains, top of the list of things to wrest back from the regulatory rubbish pile is […]

Nigeria cover image - thumbnail

White paper — Nigeria International Insights

Jelf Employee Benefits closely examines healthcare provision and challenges within Nigeria. This will be of particular interest to HR decision makers with employees based in Nigeria, and assesses the environment, risks, facilities and safeguards that are relevant to organisations that are actively deploying expatriate staff in this location.


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Lawrence Robbins 9th February 2010 at 8:48 pm

    If somebody eats 10 Big Macs per day and dies of obiesity is it McDonald’s fault? No. If somebody takes out a 95% Mortgage, a further loan to cover the equity ( undisclosed on the application) a couple of personal loans for furnishings etc and then uses credit cards to fund lifestyle (as they have not fully budgeted the costs of home ownership) is it the mortgage lender’s fault ? Once again No. I have seen borrowers who have paid a mortgage successfully even though, due to changes in circumstances, the multiple was close to 7 x income. I have seen borrowers who on 1 x joint income are in arrears due to lifestyle. Borrowers have to take some responsibility for their own finances. Government initatives have even given some the message ‘Your Home will not be repossessed even if you cannot be bothered to pay your mortgage’.

  • John Gilbert 9th February 2010 at 5:16 pm

    Mortgage demand was weak in 2007 yet approval levels were near record highs. Mortgage demand in March 2009 was very strong as many mortgagors wanted to remortgage probably without success. Nearly 30% of consumers intending to borrow by credit card in December are running into debt. In a year of consumer credit falling, the level of credit card debt outstanding jumped by £2.5 billion to £55 billion in 2009 while personal loans outstanding fell by £9 billion. The full consequences of the unplanned mortgage borrowing in 2007 are set to be played out in the next two years as interest rates are forced up.

  • Bewildered 9th February 2010 at 5:13 pm

    No link between BBR & mortgage rates, Some People! The crux of the matter is the differentials that lenders are working on at the moment. If you look historically at the margins used over the last 30yrs or so by lenders you will find that they tend to average between 0.75 & 1.5% not 4+%. I think that you will also find that taken as an average the current returns on the majority of existing investment accounts struggle to exceed 1%. So yes, there is a link currently between BBR Libor & Mortgage rates. BBR/Libor 0.5/.0.63 are being used to set the criteria for investments whilst SVRs hover between 3.75 to 5.5. The link is that if you are a existing saver your returns are pitiful, if you are new borrower with less than 20% deposit/equity your rate is punitive. It will also be very interesting to see whether the lenders let go of these differentials easily when interest rates start to climb, I think probably not. Talk about paying twice for the banks rescue!

  • Anon 9th February 2010 at 4:59 pm

    Quote: “The lenders cited excessive borrowing form other sources as the main cause of increasing repossessions”

    People are quick to blame those providing the financial service i.e. brokers & lenders – when will consumers start to take some responsibility for their over-stretched and extravagent lifestyles?

  • david 9th February 2010 at 3:58 pm

    Reading behind the data – moore blatch is showing that lenders and brokers are not to blame – it’s the other credit providers – who the press don’t castigate, but often push our clients over the edge way after we had recommended prudent / acceptable borrowing levels.

  • Chris Powell 9th February 2010 at 3:18 pm

    Why oh why do so many brokers think that there is some form of relationship between BBR and mortgage rates. Even in days of yorem when there was the luxury of wholesale funding the cost of money was related to LIBOR and not BBR. Understanding financial services includes understanding the way they work so perhaps some brokers need an education in the mechanisms of lending money without going insolvent!!

    And as for the first comment – I would suggest that the losses that the bad lenders have made on high LTV deals sent to them by brokers tell lenders they were part of the problem, not least because so many of those lenders now exist. When people talk about toxic debt they are talking about deals like the Together Loan although I am sure that no broker ever introduced one of those cases to the Northern Rock?

    Just consider that Building Society’s are paying through the nose for the FSCS when they had no involvement with the problems created by the banks.

  • Sarah Smith 9th February 2010 at 1:48 pm

    As soon as you brokers admit you were also part of the problem I guess.

  • Bewildered 9th February 2010 at 1:37 pm

    Unbelievable! They must have psychic powers to see this coming. Or maybe it is not all down to people over borrowing, it might just have something to do with lenders maintaining a massive differential between Base rate/Investment rates and the actual cost of borrowing. There seems to be no shortage of money for those that wish to borrow on Credit Cards or Store Cards at 25-30%. Roll up! First time buyer rates of up to 7%, or how about a Tracker at 5% over BBR (thoughts of what will happen when base rates start to rise beggar belief). Couple all this with total inflexibility for people who are in tough financial circumstances and I think they may be right, repossessions may increase. We must be to blame for all of this, it surely can’t be the lenders or their current stance.

  • Mike Wells 9th February 2010 at 1:05 pm

    Presumably the lenders appetite for business at all costs and letting people spend 50% of their gross monthly income on mortgage payments has nothing to do with it then.

    Just when will the lenders accept they were part of the problem?