Which way are repossessions and the housing market heading?

Posted in 'Dealing with Debt' by Richard Catlin

18 February 2010

The Government has taken a number of steps during the recession to help consumers experiencing financial difficulty. A variety of schemes have been introduced, covering everything from debt advice to better protection for homeowners and credit card holders - with mixed results.

One of the first schemes to be implemented towards the end of 2008 - the Mortgage Pre-action Protocol - saw the Government work with mortgage lenders to set out a framework of actions designed to be more sympathetic to homeowners in difficulty and which were consistently applied across the entire mortgage industry.

Since then, each quarterly set of official repossession figures released by the Council of Mortgage Lenders (CML) has resulted in a sensationalist response by many areas of the press. The latest figures show that there were around 46,000 repossessions in 2009 – or 126 a day if you prefer – the highest level for 14 years and a 15% increase on the 2008 total.

Many pictures of doom and gloom have been painted, but the total could have been a lot worse. The final quarter of the year saw 13% fewer repossessions than the third quarter, and 2% down on the 2008 figure. Similarly, the total for the year (46,000) was a lot less than the 75,000 predicted by the CML at the start of the year. It was also down on the hastily revised 48,000 prediction.

A combination of interest rates remaining at record lows, increased availability of debt help for consumers, slow court proceedings, revised lender attitudes and the Government working closely with lenders are together behind the lower-than-expected total.

Despite the more positive signs, there is no resting on laurels, with widespread acknowledgement that the worst is not over just yet. The CML is currently predicting that numbers will increase further in 2010, with an estimate of 53,000 repossessions.

When interest rates do rise – and they eventually will - there is likely to be a second wave of homeowners in difficulty, especially as uncertainty remains over levels of unemployment, rising inflation levels and the state of the housing market.

Homeowners in Scotland are already set to get an extra layer of protection, after a bill was passed that gives residents more time to find a solution, and to delay repossession for up to 3 years.

If you are worried about your own ability to manage your mortgage repayments, you can get free, impartial advice from the Debt Advice Centre on checkmyfile.

You can also get the very latest figures that houses in your area have sold for, as well as an idea as to what the trend is over the last 12 months for each property type by using our free Neighbourhood Search Service. Check as many postcodes as you like, all completely for free.

Or if your tracker mortgage has come to an end and you are facing a significant increase in mortgage payments as they rise to Standard Variable Rate, it may be a good time to move your mortgage to a cheaper lender. The first step in changing lenders should always be to check your credit report to make sure there are no nasty surprises on it, so you can get the credit you deserve.