UK mortgage repossessions on the rise due to higher interest rates - CML |
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Published
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Wed, 31 Jan 2007 11:34
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LONDON (AFX) - Higher borrowing costs are slowly beginning to take their toll on UK homebuyers, the Council of Mortgage Lenders said.It said that the number of mortgage repossessions increased to 8,860 in the second half of 2006 from 8,140 in the first six months.This took the total for the year to 17,000, which is 65 pct higher than in 2005, but broadly similar to 2001 levels.The CML had previously forecast about 18,000 repossessions in 2006, 2007, and 2008, but said it now expects 19,000 this year and 20,000 the next.'This reflects a slight worsening in prospects as a result of higher interest rate expectations since the previous forecast,' the CML said.The Bank of England increased interest rates twice last year, in August and November, and did so again this month, taking its key lending rate to a five and a half year high of 5.25 pct.The CML said the number of mortgages more than six months behind on payments fell by 8.5 pct, from 49,010 at the end of 2005 to 44,840 at the end of 2006. This represents only 0.38 pct of all mortgages, or about one in 260.Shorter term arrears, of three to six months, also fell. There was a 6 pct decline between the end of 2005 and the end of 2006.The CML said it expects short term arrears to rise during the course of 2007, mostly because of the effects of the higher interest rates.'The arrears picture at the moment is fairly complex,' said CML director general Michael Coogan.'On the one hand, the wave of problems caused by previous interest rate rises has now worked through, so recently arrears levels have fallen. On the other hand, interest rates are rising again, and payment shock may be an issue for some this year as their existing fixed or discounted deals expire.'carlo.piovano@thomson.comcp/pp/roCOPYRIGHTCopyright AFX News Limited 2006. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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CML figures indicate that repossessions and arrears are rising 