CML figures indicate that repossessions and arrears are rising |
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Thu, 28 Jul 2005 14:05
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The Council of Mortgage Lenders has released its latest figures and these show that the number of homes being repossessed by banks and building societies in the UK has shown an alarming jump. In the first six months of 2005, these numbers have registered a record level for the first time in seven years.
Banks and building societies repossessed almost 4,640 homes in the six months between January and June this year. This was significantly higher than the 3,070, which were repossessed in the previous six months. This figure equates to a 51 percent increase in repossessions and represents the first such increase since the second half of 1997. However, the repossession rate has not been as high as the 1 in 250 in 1991 at the peak of the crash in the housing market. In the six months up to June the rate stood at 1 in 2,500.
Peter Williams, CML deputy director general said that these figures are set to rise further, "Arrears and repossessions now look set to rise a little, but only to the sort of levels experienced in the past few years. A re-run of the early 1990s is certainly not on the cards," he stressed.
The CML said that three consecutive hikes in interest rates caused the rise in repossessions. The number of unpaid mortgages rose to 57,220 for the first half of the year as compared to 53,960 in previous six months. The total arrears also increased to 30,980 cases as compared to 26,920 in the second half of 2004.
Commenting on these figures, Ed Stansfield, of Capital Economics said that given the present economic scenario it was but natural that people were falling behind in their payments, "History suggests that arrears and repossessions are a lagging, not a leading, indicator of housing market conditions. Thus the fact that they remain at low levels tells us little about where the market might be heading," he observed.
Howard Archer, chief economist of Global Insight was of the opinion that this data was an indicator that house prices would not rise in the near future, "This data is consistent with our belief that house prices are likely to remain soft for an extended period rather than undergo a sharp correction," he said.
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