New statistics were published on 20th February 2009 by the Council of Mortgage Lenders on mortgage arrears and possessions. Unsurprisingly, full year figures for 2008 show a sharp rise on 2007.
- 5,000 fewer repossessions than forecast in 2008;
- 40,000 repossessions in the year - 1 in 290 mortgages;
- 10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages;
- 1 in 64 mortgages in arrears of 2.5% or more
- 1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates)
- 75,000 repossessions forecast for 2009 remains unchanged
Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML's original forecast for the year.
Source: www.cml.org.uk
You can see Mike commenting on this on the BBC News Channel by clicking here - then look under 20 Feb 2009.
DebtWizard Comment
Although the data is collected correctly by the Council of Mortgage Lenders (CML) it does not offer a true reflection of the current market conditions, these figures are misleading as there is no taking into account the number of homes being sold by families to private landlords, often referred to as 'sale and rent back scheme'.
Many of these sales under 'sale and rent back' are conducted to prevent the home being repossessed and the seller then usually remains in the property, albeit being owned by someone else, and pays rent, so in effect becomes a tenant.
It is estimated by the Financial Services Authority (FSA) that some 50,000 of these homes have been sold under this scheme over the past 'few' years and Mike estimates that about 20,000 to 25,000 of these have been sold during 2008 alone. Mike feels that because 'sale and rent back' was not an option back in 1991 when 76,000 homes were repossessed he believes that the true figure for this year without 'sale and rent back' would be around 60,000 - 65,000 homes, this would then make it compatible with those figures back in 1991.
Another point that can not be challenged is that it takes between 6 and 12 months to have a home repossessed, therefore the figures released are based upon old data when the economy was more stronger.
Mike argues that with unemployment expected to reach 3 million by the end of the year then this will only add to the repossession figures. He claims it is only spin, together with 'sale and rent back', that is masking and distorting the true state of the housing market.
Mike has written an article 'out of the blue' and explains about how long lenders have to pursue a borrower for a mortgage shortfall following the forced sale after the repossession. Some will be astounded by the length of time they can chase the debt.
To view the article click here here
You can see Mike commenting on this on the BBC News Channel by clicking here - then look under 20 Feb 2009.
