Repo's fall further

Graham_Devon

The number of homes being repossessed has fallen to a five-year low, according to mortgage lenders.

The Council of Mortgage Lenders (CML) said there were 8,200 repossessions in the third quarter of 2012, the lowest quarterly number since 2007.

The figure was down from 8,500 in the second quarter of this year, and lower than the 9,600 repossessions recorded in the same period a year ago.

The CML said the number of borrowers in arrears was stable, at 159,100.

"Our figures show that good communication and effective arrears management by borrowers, lenders and money advisers are helping the vast majority of those with mortgage repayment problems," said the CML's director general, Paul Smee.

"The rate of repossession has continued to fall and it's clear that lenders want to keep people in their homes."

Good news, obviously for those struggling.

I'd just like to look a little further, and ask how much it's actually cost to lower these repo's. I guess we'll never know.

Were now in a bizzare situation whereby if the trend continues, we'll actually have less repo's in a recessionary environment, than we have in "normal" times.

http://www.bbc.co.uk/news/business-20249822

IveSeenTheLight

Graham_Devon wrote: »

Good news, obviously for those struggling.

I'd just like to look a little further, and ask how much it's actually cost to lower these repo's. I guess we'll never know.

Were now in a bizzare situation whereby if the trend continues, we'll actually have less repo's in a recessionary environment, than we have in "normal" times.

http://www.bbc.co.uk/news/business-20249822

Didn't the CML originally estimate increased repo's again for 2012.
I'm confident at some point repo's will rise again.

What this should provide is evidence that the risks are lower as you say even in a recessionary environment.

Graham_Devon

IveSeenTheLight wrote: »

Didn't the CML originally estimate increased repo's again for 2012.
I'm confident at some point repo's will rise again.

What this should provide is evidence that the risks are lower as you say even in a recessionary environment.

I'm not sure it proves the risks are lower, rather, as the article says, the way they deal with struggling clients has changed. The pendulum has swung so far the other way that, if the trend since 2008 continues, we'll see less repo's in a time of recession, lower employment, lower pay, than we would in times of growth, higher employment and increasing pay. Whether that's a good thing or not, I suppose is a personal view.

As said, obviously this is good for those struggling, who would, for all intents and purposes have been repo'd by now had the way they dealt with potential repo's not have changed so drastically.

But theres a cost to that, and I'd like to look at that...cost not only to potential buyers, (and not only financial costs either, for instance, we have underoccupied owners using taxpayer support to stay in their underoccupied house, who could quite easily use their own finances to readjust, freeing up more suitable houses, potentially at a lower cost for those requiring them) but also to the taxpayer and banks. Can't really as there is no data, and even the banks can't release true data as even they don't know themselves. Theres obviously a potential bonus for investors however, as the banks don't have to realise losses. We know it costs the taxpayer £400m a year at the moment through SMI, but that's just one of several costs and factors.

You can't really use this data as a risk evaluation though to suggest everything is better than it actually is, as those struggling continues to increase (allbeit slowly now compared to 2008 due to a more constant economic backdrop).

I'm wondering if we will now start seeing people put on interest only by the banks under forbearance as untouchable.....at the same time as banks push "in credit" IO mortgage holders onto a repayment plan. This again, is another "cost" to those who are coping perfectly well with their situation, but forced to bolster things up due to the problems elsewhere that are just remaining lingering problems.

Eellogofusciouhipoppokunu

Graham_Devon wrote: »

As said, obviously this is good for those struggling, who would, for all intents and purposes have been repo'd by now had the way they dealt with potential repo's not have changed so drastically.

But theres a cost to that, and I'd like to look at that...cost not only to potential buyers, but also to the taxpayer and banks. Can't really as there is no data, and even the banks can't release true data as even they don't know themselves. Theres obviously a potential bonus for investors however, as the banks don't have to realise losses.

If there is a bonus to investors (in banks) because the banks don't have to realise losses, then by the same token, there is a bonus to the banks for the same reason.

As has been discussed ad nauseum on here, the tax payer benefits because it's substantially cheaper to keep families in their homes than it is to pay for Housing Benefit.

There is a cost to potential BTL landlords because they can't pick up a repo on the cheap at auction, but then I can't see too many on here getting too upset by that.

coastline

further news..

http://www.independent.co.uk/property/number-of-buytolet-mortgages-continues-to-grow-8297302.html

JonnyBravo

Eellogofusciouhipoppokunu wrote: »

There is a cost to potential BTL landlords because they can't pick up a repo on the cheap at auction, but then I can't see too many on here getting too upset by that.

I guess that's cos we're all in it for the greater good of society.

System

JonnyBravo wrote: »

I guess that cos we're all in it for the greater good of society.

Apparently your middle name is "made up portfolio" so I don't believe you any more.

ess0two

Damn there goes my opportunity of a cheap gaff.

Eellogofusciouhipoppokunu

JonnyBravo wrote: »

I guess that's cos we're all in it for the greater good of society.

I'm surprised that Devon seems to be upset that low repo rates are hitting BTL landlords, but there you go.

JonnyBravo

Joeskeppi wrote: »

Apparently your middle name is "made up portfolio" so I don't believe you any more.

:rotfl:
Oh the shame.
I'm going to have to get onto my MP about this. I wonder if he's on Twitter?

Graham_Devon

Eellogofusciouhipoppokunu wrote: »

As has been discussed ad nauseum on here, the tax payer benefits because it's substantially cheaper to keep families in their homes than it is to pay for Housing Benefit.

It has been discussed ad nauseum, but what's ignored ad nauseum is equity. Anyone with over 16k won't get housing benefit.

Theres a lot of equity out there, especially for those who bought their house some years ago. Considering over 50% of those on SMI are over 60 years of age, it stands to reason that there is a high probability of a lot of equity which they could use to downsize.

Some would require housing benefits should SMI cease, but for the vast majority, looking at the figures available, this would not be the case.

Whether these people on SMI and on interest only deals will be excluded from those who get badgered to move to repayment in 2014, remains to be seen.....but if they are not ringfenced, we then face a situation of chucking taxpayer money at a household who's situation get's worse month after month, as they can't afford to pay the repayment aspect and SMI only covered interest, and makes ongoing SMI pretty much pointless and wasteful as the end point remains the same...you've just literally delayed it (which is what SMI should be used for, rather than a simple ongoing payment forever).

If they are ringfenced and sheltered from having to provide a payment plan in 2014, then that raises an obvious equality issue, which I'm sure many of those currently on IO, like yourself, who would be forced to change your plans, wouldn't particularly find all that amusing.