House repossessions to rise in 2012 says CML
Next year will witness rising numbers of house repossessions according to the latest estimations from the Council of Mortgage Lenders (CML).
The CML reckons that the number of house repossessions will increase to 45,000 in 2012 from 37,000 this year. That’s an increase of 22%.
The repossession growth is largely down to increasing unemployment along with a decrease in the average household income across the country.
The CML has also cut its forecast for both mortgage lending and property sales in 2012.
Property sales are set to drop from 850,000 this year to 825,000 in 2012, and the CML has revised its mortgage lending forecast downwards.
Previously it had estimated mortgage lending would hit £150 billion in 2012, up from £138 billion this year. However, next year’s figure has now been revised to £133 billion, a drop of £5 billion from 2011.
The latest numbers from the Financial Services Authority (FSA) show an increase of 5.8% in home repossessions. 9,134 houses were repossessed in the second quarter, which increased to 9,670 in the third quarter.
Bob Pannell, Chief economist at the CML, commented: “Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture, for both mortgage lending and property transactions, at least until real incomes show signs of stabilising as inflationary pressures recede.”
Broadly flat seems overly positive phrasing when you consider the CML’s ‘down by over 10%’ mortgage lending estimates. As to whether inflationary pressures are likely to recede next year, that doesn’t seem likely either.
According to Bob Lender at FinancialAdvisor.co.uk, “Repossessions are being held at lower levels than they realistically should be due to the extremely low interest rates which have been maintained since the so-called credit crunch. Mortgages are short in demand because of high house prices restricting the market, even though mortgage rates are otherwise very good.”
At the close of the eighties, during the last major housing crash, there were far more repossessions taking place.
The worst of this economic storm is yet to come, and will ensue when the government can no longer hold interest rates at the unnatural level of next to nothing.
Source: CML warns house repossessions will rise
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