News: Weekly News Round Up - No Festive Cheer In Repossession Figures

Fri, 18 Dec 09

Repossession became a key issue in housing market news this week with latest figures from the Financial Services Authority (FSA) showing an increase in the number of people losing their homes.

The figures show a 2.8% rise in the number of repossessions for the third quarter of 2009 compared with the previous three months. During the third quarter there were 14,000 repossessions.

However, the FSA figures suggest that the number of repossessions could fall next year. The number of mortgage holders falling into arrears on their repayments fell 10%, to 46,000, in July to September this year compared with the previous quarter.

The Council of Mortgage Lenders (CML) says the FSA’s figures tally with its prediction that the increase in repossessions will not be as high as feared at the start of the year. 

CML director general Michael Coogan said: "The FSA data reflects what our numbers have already portrayed. Arrears and possessions are lower than expected earlier in the year.”

The CML has consistently said this year that lenders are making great strides to ensure that repossession is only used as a last resort.

In addition, the government said this week that it would provide extra funding for debt advice and help desks at courts.

But a report this week by debt and homelessness charities says that many lenders are still too hasty to repossess homes. The report also says that judges are failing to comply with a government protocol that repossession should only be used as a last resort.

The report by Advice UK, Citizens Advice and Shelter says that in a third of repossession cases mortgage providers failed to fully consider all the alternatives or judges failed to ensure the protocol was followed.

Specialist lenders who deal with riskier loans were among those criticised for being too swift to take legal action against borrowers in arrears.

David Harker, chief executive of Citizens Advice, said: “The safeguards already in place to protect people from avoidable homelessness need to be strengthened if they are to succeed in stemming the rising tide of repossessions ”
The charities’ report was based on the cases of 452 people who were given help by their representatives in court on the day of their repossession hearing.

Housing Minister John Healey welcomed the charities’ report and pledged tough measures to tackle specialist lenders who are too willing to take legal action against borrowers.

He said: “I am also deeply concerned that a disproportionate number of repossession cases come from specialist lenders. So tougher regulations next year from the Financial Services Authority will mean all borrowers are treated with the same tolerance and understanding, regardless of who their lender is.

"These measures combined will ensure that in all cases, repossession remains the last resort."

The FSA figures for the third quarter also shed more light on the types of mortgages borrowers are securing.

Just 34% of mortgages were for remortgaging. This is the lowest proportion since the FSA began its quarterly updates on the mortgage market two years ago.

The figures also show that lender’s are still requiring large deposits. The proportion of new lending done at a loan-to-value rate of more than 90% accounted for just 2% of new advances in the quarter.

This may go some way to explain why potential first-time buyers are still finding it hard to enter the property market and why gross mortgage lending is down.

According to latest National Association of Estate Agents (NAEA) figures, first-time buyers made just 19% of all home purchases during November.

CML’s gross mortgage lending figures released this week show that an estimated £13bn was borrowed in November, 10% down on October’s figure and 14% down on the figures released in November last year.

The CML says that while a decline between October and November is typical, “the 10% fall is a little larger than normal.”

Mixed news emerged this week regarding house prices. The Royal Institution of Chartered Surveyors’ latest monthly survey shows that the balance of surveyors reporting a rise rather than a fall in house prices in November was 35% - see Home News17 Dec 2009.

RICS spokesman Ian Perry says house prices growth is being caused by the level of new instructions from sellers failing to match increasing demand among buyers.

This increasing interest among potential buyers is being fuelled by low interest rates and better economic conditions, he says.

He adds that this picture of house price growth is likely to continue into 2010.

Perry said: "Buyer enquiries are continuing to grow and with the pace of job losses now easing, the risk is that the New Year could see a further wave of interest in the market.”

However, Home.co.uk’s latest asking price index suggests that house prices could be set for a slight fall in the coming months. Asking prices for homes on the market in England and Wales fell back 0.4% during the month leading up to the December report.

By Joe Lepper

See also: Asking Price Index, House Prices and Trends by Town and Postcode.





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