Relief as home repossessions 'only up 3%' » Housing » 24dash.com

The number of people who lost their homes rose by only 3% during the third quarter of the year despite rising unemployment, figures showed today.

Around 11,700 people had their homes repossessed during the three months to the end of September, up from 11,400 in the second quarter, but down on 12,700 during the first three months of the year, the Council of Mortgage Lenders said.

The group said it was slashing its forecast for repossessions during 2009 to 48,000, due to a combination of increased lender forbearance, Government schemes to help people stay in their homes and the impact of low interest rates.

It had originally predicted 75,000 people would lose their homes this year, although it revised the figure down to 65,000 in June.

The number of people who were behind with mortgage repayments also dropped during the third quarter, despite the bleak economic backdrop.

Around 194,600 people were in arrears of at least 2.5% of their outstanding mortgage at the end of September, the equivalent of 1.77% of all mortgage customers, down from 204,200 or 1.86% at the end of June.

The CML said it now expected 195,000 people to be in arrears at the end of this year, well down on its previous forecast of 360,000.

It is also predicting there will be only a modest deterioration in the number of people who are unable to keep up with their mortgage next year, with repossessions expected to rise to 53,000 in 2010, while it predicts the number of people in arrears will increase to 205,000.

CML director general Michael Coogan said: "We are glad to have been wrong on our previous forecast for mortgage repossessions this year.

"Low interest rates, and lenders' forbearance policies, have helped to cushion many households facing financial problems.

"And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time."

The Ministry of Justice also released figures today showing there had been a fall in the number of repossession claims issued to courts in England and Wales during the third quarter.

A total of 24,938 claims were issued on a non-seasonally adjusted basis, 6% fewer than during the second quarter of the year, and 34% below the same period of 2008.

The drop has been driven by the introduction of the Government's pre-action protocol last November, under which courts can grant a repossession order only if all other measures to keep someone in their home have failed.

But despite the drop in the number of claims issued, the number of claims which led to a repossession order being made rose for the second consecutive quarter to 20,917, although the figure remained well down on the 29,284 repossession orders granted during the third quarter of last year.

Around 44% of the repossession orders granted were suspended orders, compared with 47% a year earlier.

The Government has introduced a raft of measures to help homeowners, including increasing the help available to people on certain benefits with paying their mortgage.

It has also introduced the Homeowner Mortgage Support scheme, which enables people to defer paying interest on up to 70% of a mortgage for up to two years.

It claimed today that around 300,000 people facing repossession had benefited from some form of help, including free debt advice.

But by the end of September, only 92 families had completed its Mortgage Rescue Scheme, which enables people to sell some or all of their home to a social landlord and rent it back.

The Government said 11,000 households had received free advice from their local authority as part of the scheme, while 690 had had the immediate threat of repossession lifted and 510 households are going through the assessment process.

Despite the dramatic reduction in the CML's original forecast for repossessions, its new prediction of 48,000 is still the highest level since 1995 and 20% higher than in 2008.

Housing charity Shelter welcomed the fact that the rate at which repossessions are rising appeared to have stabilised, but warned that there was no room for complacency.

Kay Boycott, director of policy and campaigns at Shelter, said: "This is no time for complacency or congratulations as this is still the highest level of repossessions we have seen for over a decade.

"The CML's prediction shows growing unemployment will have a sustained impact on repossession levels next year. This, coupled with Government support schemes potentially coming to an end in the next 12 to 18 months, means we are not out of the woods yet."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The CML and Ministry of Justice data indicate that Government initiatives to reduce repossessions by requiring lenders and borrowers to examine all alternatives is having a significant beneficial impact in helping people to keep their homes.

"Home repossessions now look like being much less than feared. Nevertheless, a substantial number of homeowners will remain under serious pressure.

"Although the economy seems set to finally return to growth in the fourth quarter, activity is unlikely to be strong enough for some time to come to prevent unemployment rising further."

Liberal Democrat Shadow Housing Minister, Sarah Teather said: “Ministers have spent billions of pounds to save the banking system but their efforts to help those facing repossession have been shamefully inadequate.

“No Government programme has ever been as inappropriately named as the Mortgage Rescue Scheme which helped just 14 families to the end of June.

“We need to urgently reform mortgage law so that courts have the power to ensure that repossession is only ever a last resort.”

Conservative Shadow Housing Minister, Grant Shapps, said: "Almost 11,000 people approached local authorities to seek help from Gordon Brown's delayed Mortgage Rescue Scheme - but fewer than 100 families throughout England got any assistance.

"It's time the Government stopped trying to grab quick headlines and actually brought in policies to help vulnerable families across the country."