Banks expect increase in repossessions

geneer

http://www.telegraph.co.uk/finance/personalfinance/8478172/Banks-expect-increase-in-repossessions.html

Have they decided its time to call in their markers?

Banks are expecting an increase in repossessions because of the weak economy, they warned yesterday.

They told home owners they were “not confident” that they could lower arrears and repossessions as successfully as last year.
In 2010, the number of repossessions dropped to 36,300 compared with 47,700 the previous year, according to the Council of Mortgage Lenders.

Measures taken by banks and the Government to ensure people were only evicted from their homes as ‘a last resort’ ensured levels for 2010 were lower than forecast amid the fallout from the recession.

But lenders expect numbers to increase again this year to 40,000, the same level as 2008 during the height of the credit crisis.

The CML blamed the expected rise on a weak economy, Government cuts, the rising cost of living and possible interest rate rises.


In its 2010 Annual Report, the CML said: “We are not confident that arrears and possessions will be countered so successfully in 2011.
“The outlook for economic recovery remains weak, and planned cuts in government spending, tax increases, higher inflation and the prospect of rising interest rates are all likely to bear down on borrowers’ finances.”
“Additionally, the government has cut directly support for borrowers.”
Under the Government’s Homeowner Mortgage Support Scheme, home owners facing a loss of income were able to reduce their monthly mortgage payment for up to two years, but it was closed on April 21.
Meanwhile, the Government’s Mortgage Rescue scheme allows families to either get an equity loan to reduce their mortgage, or sell their home and remain as tenants.
The CML also expects a rise in the number of home owners who fall behind with their monthly mortgage payments from 169,000 in 2010 to 180,000 this year.
The CML added: “On behalf of lenders, we remain committed to working with borrowers, advice agencies and the government to minimize mortgage arrears and possessions in the challenging times ahead.”
A spokesman for the Department for Communities and Local Government said: “Ministers believe that the most effective thing the Government can do for homeowners is to tackle the record Budget deficit and avoid the need for rapid increases in interest rates, but that effective help must still be available for those struggling to pay their mortgages.
"That’s why the Mortgage Rescue Scheme is still available as a last resort to homeowners facing the real threat of repossession.”

Ouch. And thats with emergency bail out base rates.

ILW

Hopefully we can get back to a true market.

julieq

So an extra 4000 or so repossessions relative to last year and 3700 odd less than 2009. Recall that at the peak level of repossessions in 2009, prices were rising.

So a lower absolute level than that now is REALLY going to have an effect isn't it?:rotfl:

But keep the faith, eh?

julieq

ILW wrote: »

Hopefully we can get back to a true market.

Oh for heaven's sake. Virtually no-one actually used the government and lender schemes. Even the mortgage equivalent of housing benefit - paid for by taxes homeowners have already paid - is a tiny amount relative to the total numbers of mortgages.

Removing all help for owner occupiers during periods of unemployment would be a flea bite on an elephant. Given the amount of help renters get it would also be extremely unfair.

And can we please get over the idea that interest rate rises are going to cause problems. The data shows that even quite large rises would have a negligible effect.

Prices are high because accomodation is scarce. End of. If the biggest financial scare in history only managed about a 10% net decrease, you've had your chips now as we crawl uphill into recovery.

angrypirate

Prices are high because its a bubble. When the labour government screwed over baby boomers pension pots, they decided to take their investments into their own hand. As many of them didnt (and still dont) understand stocks and shares they decided to go for something "easy" with tangible assets. Property turned from being a place for shelter to an investment overnight with shameless ramping and the lettings market full of useless amateur landlords. Many FTB properties were classed as desirable buy to let properties and as such to buy to let landlords squeezed many would be FTBers out of the market.

Saying that a rise in interest rates wouldnt have an effect is crap - even Mr Wilson admits that he would have gone bankrupt had interest rates not been slashed (i think he said he was literally days away from insolvency)

julieq

Yes yes, we know the bear doctrine.

But have you considered the possibility housing was not in a bubble at all?

It certainly would appear that rental yields make it an attractive investment, which would suggest prices are correct. Anyway, if you want to believe an army of baby boomer BTL landlords are pricing you out, that's your business. It's just like believing stocks and shares are too complicated really, has no real basis in reality but it comforts people who won't push past what they're told into the nitty gritty of what's actually true.

If one of the worst recessions in history and losses of confidence in the financial system only marginally depresses prices, and when even massively restrictive lending doesn't force prices down significantly, you're looking at pretty robust price support. And the reason for that happening here and not happening in the US or Ireland is essentially down to supply and demand imbalance. We don't build enough. Accomodation is scarce and expensive.

Orpheo

julieq wrote: »

But have you considered the possibility housing was not in a bubble at all?

Briefly. Then immediately dismissed the notion as b0110cks.

julieq

That's your problem then. You're locked into a faith based belief system.

geneer

julieq wrote: »

But have you considered the possibility housing was not in a bubble at all?

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:
Oh dear.
That "pshhhhh" noise was the last vestiges of your credibility evaporating.

geneer

julieq wrote: »

That's your problem then. You're locked into a faith based belief system.

Are you drunk Julieq.
Bit early to be hitting the G&Ts.

julieq

That's it Geneer, ram your thumbs deep into your ears and you won't have to listen to heretical thoughts like mine. Anyway if it was a bubble it's not doing a great job of popping, is it?

What's your explanation for prices here not doing what they did in the US given essentially the same measures being taken in both places?