We haven’t turned the repossessions corner yet

by John Fitzsimons on 17 November 2009  |  1 comment
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Last week saw more positive news on the number of properties being repossessed, but we are not out of the woods just yet.

About a year ago, with the credit crunch starting to hit top gear, the Council of Mortgage Lenders put out an exceptionally gloomy forecast for repossessions in 2009.

The trade body came to the conclusion that with borrowers in dire straits and lenders struggling to keep afloat, there would be a whopping 75,000 properties repossessed. The figure was particularly significant, as there were 75,000 repossessions in 1991, the height of the last housing market crash.

The prediction was surprisingly negative though - in 2008, there had been 5,000 fewer repossessions than the CML had expected, at 40,000. The trade body was forecasting repossessions to virtually double.

Of course, a year on, things look a little different. The Government has launched a number of initiatives to try to help keep homeowners in their homes, as well as giving the lenders numerous slaps on the wrist to ensure repossessions remain the last resort.

As a result, the Council of Mortgage Lenders has slashed its forecast for 2009 on two occasions, first to 65,000 and then, last week, to 48,000. Quite a difference from 75,000, I'm sure you'll agree.

However, it's important that we don't let this dramatic revision take away from the fact we are far from out of the woods on the subject of repossessions. In fact, repossessions actually increased in the third quarter.

Despite all the help given to struggling borrowers, and all the warnings to banks, they still increased quarter on quarter. That has to be a worry.

And 2010 is surely only going to get tougher.

The effects of rising unemployment have yet to kick in, and Bank Base Rate can't stay at 0.5% forever. I'm an eternal optimistic, so I'm hopeful that things are very definitely on the up. But there are plenty of potential spanners in the works.