Thursday, 20 January 2011

Repossessions set to rise

Number of repossessions to rise as lenders lose patience

The number of people being evicted from their homes will rise this year as banks lose patience with home owners who fail to keep up with their mortgage payments, lenders have warned.

An estimated 40,000 home owners will have their properties repossessed in 2011, up from an estimated 36,000 last year, according to the Council of Mortgage Lenders.
It blamed rising unemployment and more people struggling to keep up with their monthly mortgage payments.
In a statement, it said: “Our prediction that mortgage arrears and possessions will tick up again in 2011 will ensure that there is ongoing scrutiny of market behaviour.
“In our view, payment problems will be driven by a combination of job losses, reduced government support for borrowers in difficulty and an end to the mortgage rescue options for some households with worsening mortgage arrears. There are limits to forbearance as well, and this will come to the fore over the next few years.”
During the economic downturn, lenders were told by the Government to regard repossession as a last resort for borrowers in difficulty.
Home owners looking for a new deal suffered amid a lack of affordable mortgages last year and the CML said this pressure is likely to “intensify” in 2011.
It said: “Unfortunately, there is a real risk this year that pressures on mortgage funding may intensify again as the deadlines draw nearer for firms to repay their commitments under official support schemes.”
Under the terms of their massive billion pound bailout by the Government during the credit crisis, Britain’s biggest high street lenders were told to lend to struggling home owners.
These lending targets are due to be withdrawn at the end of next month, when the state-owned banks will be free to set their own targets. These are widely expected to be significantly lower due to the lack of competition in the mortgage market.
In November last year, the CML unveiled the latest repossessions statistics which showed the number of people evicted from their homes fell for the fourth consecutive quarter to 8,900 between July and September, down from 9,400 in the preceding three months.
It also reported a slight improvement in the number of people who had fallen behind with their mortgage during the third quarter, with 176,100 people in arrears of 2.5 per cent or more of their outstanding debt, down from 178,200 at the end of June.
It is due to report the exact number of repossessions for last year next month.

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