Repossessions in 2007 not as bad as expected

Posted on 13 February 2008 by Ray Boulger

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Yesterday's repossession figures from the Council of Mortgage Lenders (CML) for the second half of 2007 are encouraging as the CML had forecast as recently as November last year that repossessions would total 30,000 for the year and the result is 27,100. They have revised down the originally announced figures for the first half of 2007 from 14,000 to 13,600 and what is really surprising, but very encouraging, is that in view of the increase in interest rates up to last summer the second half figures didn’t continue the increasing trend in half yearly figures seen up to the first half of 2007. The CML had forecast a 50% increase in 2008 to 45,000, but in the light of the lower outturn for 2007 I suspect they will downgrade this figure when they redo their forecasts, which will probably be in March or April.

However, it is particularly difficult to forecast the repossession numbers for this year as we are in uncharted territory with the liquidity crunch and there are other conflicting factors. There is likely to be a sharp increase in the number of repossessions of heavy adverse sub prime borrowers who are unable to remortgage as a result of lenders tightening their criteria. Some deals which could have been done with several lenders 6 months ago are now just not doable.

On the other hand most people other than recent First Time Buyers now have a reasonable amount of equity in their property and also it is hard to estimate the impact of the new breed of sale and leaseback operators which have sprung up in the last couple of years. Much of their activity is likely to be with borrowers who would otherwise have been repossessed and so this will help to limit the number of repossessions.

Category: House and home, Interest rates, Mortgages, Personal finance, Property market

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