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Repossessions fall to lowest level since crash

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  • 08/11/2012
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Repossessions fall to lowest level since crash
The level of mortgage repossessions fell to its lowest since the financial crisis during the last quarter, according to the Council of Mortgage Lenders.

The report said that 8,200 properties were taken into possession during the three month period between July and September, a fall from the figure of 9,600 posted for the same period last year.

This was the lowest quarterly number of properties repossessed since 2007, the CML said that significant usage of forbearance by lenders had kept repossession figures low.

Figures released by the Ministry of Justice today said that the number of possession claims, recorded when a claimant begins the legal process to repossess a property, were also down. It said 15,050 mortgage possession claims were issued in the second quarter of 2012 less than half the level seen during 2008.

The MoJ estimates that around 69% of mortgage possession orders led to actual repossessions, a sharp rise on the 44% conversion rate seen in 2008.

The CML number of mortgages with more than three months in arrears was 218,400 at the end of the quarter, the lowest number in four years.

However, there was an increase in the number of mortgages with arrears totalling more than 10% of the outstanding balance with 29,000 cases noted in the report. The number of mortgages with arrears of over 2.5% fell year-on-year to 159,100.

CML director-general Paul Smee commented: “Our figures show that good communication and effective arrears management by borrowers, lenders and money advisers are helping the vast majority of those with mortgage repayment problems. The rate of repossession has continued to fall and it’s clear that lenders want to keep people in their homes.”

Richard Sexton, director of e.surv chartered surveyors, said: “Long-term arrears have risen yet repossessions are down, which is thanks to lenders’ generous forbearance policies.

“The issue is whether this is a sustainable approach in the long-term. This is the fourth quarter in a row where arrears of 10% or more have increased, yet repossessions have remained broadly flat.

“Banks won’t be able to go on absorbing long-term arrears into their balance sheets infinitely, and they also have a duty of care to ensure borrowers don’t build up ‘too much’ debt by allowing them to stay in a property if this is unsustainable.”

Nick Hopkinson, director PPR Estates, added: “The major banks and mortgage lenders are still struggling to hide the real extent of their greedy and reckless lending prior to 2008 by showing previously unheard of levels of forbearance towards struggling borrowers in arrears.

“They are desperately trying to keep people in their houses. This is not being done to help borrowers but simply to protect previous bonuses and share prices by avoiding having to revalue their entire loan books as a result of the actual sales prices they would achieve on repossessed stocks.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Although many borrowers are still having their homes repossessed, it is encouraging that this is the lowest number in any quarter since 2007. But it is important that complacency doesn’t creep in.

“Lenders must continue to show forbearance and look after customers who are struggling by letting them switch to interest only, take payment holidays or extend their mortgage terms.”

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