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'Second wave' repossession threat UK repossessions eased in spring
(about 9 hours later)
Homeless charity Shelter is fearing a second wave of home repossessions, especially when interest rates rise. The number of homes repossessed in the UK fell 10% in the second quarter of the year compared with the previous three months, lenders say.
It said that rising unemployment would add to the risk of homeowners being unable to make their regular mortgage repayments in the coming months. But the 11,400 homes repossessed was a rise of 14% compared with the the same period the previous year, the Council of Mortgage Lenders (CML) said.
The latest UK repossession figures are to be published at 0930 BST on Friday. It recently reduced its estimate for repossessions in 2009 by 10,000 to 65,000 homes in the UK.
Although some "rescue" schemes have been slow to start, advice services say early intervention has prevented some people from losing their homes. The group said that early advice for struggling homeowners was helping.
Unemployment Arrears
Official figures published this week showed that the number of people out of work in the UK has risen to its highest level since 1995. Low interest rates also meant that the number of homeowners falling behind with their mortgage payments had also levelled off.
Recent schemes to help struggling homeowners have helped prevent the number of repossessions being as high as predicted class="" href="/2/hi/business/8197387.stm">Help for those losing their home class="" href="/2/hi/business/8199969.stm">Trying to fend off repossession The number of home loans with arrears of more than 2.5% of the mortgage balance in the second quarter of 2009 was 205,600. That compared with a total of 203,900 at the end of the first quarter, and 139,700 at the end of the second quarter of 2008.
Unemployment increased by 220,000 to 2,435,000 in the three months to June, taking the jobless rate to 7.8%. However, separate figures from the Ministry of Justice gave a hint of a future rise in repossessions in England and Wales.
However, low interest rates have eased the mortgage burden for some homeowners who have lost their jobs. The Bank rate has been at an historic low of 0.5% since March. The number of repossession actions started in the courts bounced back in the second three months of the year, rising by 10% compared with the first three months of the year to 26,419.
"Shelter fears a second, more devastating tidal wave of repossessions is coming as unemployment continues to rise, the recession deepens and at some point interest rates begin to climb again," said a spokeswoman. The number of repossession orders granted by judges also rose over the same period, up 16% to 19,123.
Forecast Homeowners can still negotiate with their lender at this stage of the process to stay in their home. Nearly half of these repossession orders, 46%, were suspended as judges allowed borrowers to negotiate a deal with their mortgage lenders.
Figures published three months ago by the Council of Mortgage Lenders (CML) showed an annual rise in UK repossessions of 50% in the first three months of the year.
However, in June, the lenders' body cut its forecast for the number of homes it expected to be repossessed in 2009.
It is predicting that 65,000 homes will be repossessed this year, some 10,000 fewer than the estimate it made in December. This would still be significantly higher than the 40,000 homes repossessed in 2008.
The CML and the government believes that free advice to those who have fallen behind with mortgage payments, and "last-gasp" advice in repossession courts, have allowed many people to stay in their homes.
More intricate projects - such as schemes to allow people to sell their homes to housing associations and live in them as tenants - have had a slow start.
To date, no families have completed the "mortgage rescue" process in Scotland, six were finished by the end of May in England, and Northern Ireland is still waiting for funding to start the project. However, 70 families have been through the scheme in Wales.
Many more people might need to use these schemes in the coming months, Shelter warned.
"Recent schemes to help struggling homeowners have helped prevent the number of repossessions being as high as predicted," said a spokeswoman.