Mortgage repossessions still too high
New figures published today by the Council of Mortgage Lenders (CML) show that there were 36,000 repossessions in 2010, whilst 175,000 households were in arrears. These figures are an improvement on 2009, with repossessions declining by 24% and arrears by 13%. there is no room for complacency though, as the CML forecasts a slight rise in mortgage problems this year ,with 40,000 repossessions and 180,000 households expected. Taking into account the average family size, this equates to more than half a million people’s homes at risk.
The underlying cause is the weak UK economy, which is being further damage by cuts in Government spending. Conversely, it is also the case that there is unlikely to be a strong recovery as long as faith in the housing market remains weak. A large number of repossessions obviously constitutes a human tragedy and also has a corrosive effect on faith in the housing market.
The Government should certainly look again at its decision to cut the rate of support for Mortgage Interest and make sure that lenders are never tempted to take short cuts with those in arrears. Mortgage lenders could also think about doing more to extend schemes to convert mortgages into rent agreements so that people do not lose their homes
One crumb of comfort is that repossessions have not reached the epidemic proportions seen in the early 1990s. Government has been more willing to intervene this time around, but it looks to me as though changes in lenders behaviour has largely been driven by the fact that they learned a Sharp lesson from the Major recession. Back then, they all rushed to repossess, only to find that they could not sell, with the result that their share prices fell sharply.
Just to recall, there were 75,000 repossessions in 1991, equating to 0.77% of mortgages, whilst at the height of the recent recession there were 48,000 repossessions, which constituted 0.32% of mortgages.
It is also important to note that repossession put further strain on our social housing system, which is grossly underfunded and cannot meet existing demand. We must be tireless in making our demand that everybody in the UK should be able to have a decent home.