Housing repossession worry is far from over
Published 12/02/2010 | 09:58
As we have just been through the longest recession since records began, the fact that home repossessions have been much lower than expected is a cause for mild celebration.
We might have expected the 1991 high water mark of 75,500 repossessions to be comfortably surpassed last year, so it is a relief that only 46,000 people lost their homes.
But let's not get too pleased with ourselves. Some 188,000 people are now in mortgage arrears, the Council for Mortgage Lenders reports. It expects repossessions to rise again during 2010, with a current forecast of 53,000 for the year as a whole.
That may prove optimistic. There are several reasons why repossessions undershot expectations last year — and none of them are here to stay. First, interest rates were at record lows for the whole of 2009, making mortgage payments more affordable. That will only last so long. Second, unemployment did not spike up as quickly as expected, so fewer people than forecast saw their incomes disappear. But joblessness is likely to rise this year.
Finally, lenders have come under intense pressure not to repossess. Many may feel this pressure ease as memories of the financial crisis start to fade.
This crisis is not over. Housing minister John Healey got into hot water yesterday by suggesting that repossession was the best option for some people.
He was right, in that not stacking up more costly borrowing, can be the best way to move forward.
Still, Mr Healey was insensitive; to make amends, he must do everything possible this year to keep repossessions down, starting with keeping an even closer eye on lenders.