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Telegraph article – UK housing reposessions 2009

18th December 2008

The Council of Mortgage Lenders estimated that the number of repossessions will soar by 67 per cent on this year's figure of about 45,000, taking the total to a level not seen since the height of Britain's last recession in 1991, when 75,500 lost their homes.

If the CML's forecast proves correct, the number of homes being repossessed will have gone up nine-fold in just five years.

In its market commentary for 2009, the CML said: "The worsening economic backdrop will inevitably lead to a rise in the number of borrowers losing their jobs and facing disruption to their income.

"Even though lenders will seek to minimise repossessions in 2009, the worsening economic backdrop does point towards an inevitable increase in the number of cases where a sustainable alternative solution cannot be found."

The group said it also expects that the number of households falling three months behind with their mortgage payments will climb to about 500,000, compared with about 210,000 this year.

It said that many of these people would only be saved from repossession thanks to recent government efforts to force lenders to give them breathing space, adding: "Lenders showing greater forebearance to reduce repossessions, including recent interventions such as the Homeowner Mortgage Support Scheme, will mean that more borrowers will remain in arrears."

The group also predicted that in 2009 net lending will become negative for the first time since records began in 1964, meaning borrowers will repay more existing debts than they borrow in new mortgages, with the deficit estimated to reach £25 billion.

It found that total mortgage lending plunged to a new low in Novemver, tumbling by 21.5 per cent from October to £14.6 billion. Lending has more than halved since last November.

Howard Archer, the chief UK economist at Global Insight, said: "Mortgage activity is under major pressure from extremely tight credit conditions, still relatively stretched housing affordability, widespread belief that house prices are going to fall substantially further and an unwillingness of many people to commit to buying a house when the economic outlook and job prospects look so bad.

"These factors are likely to continue to outweigh the beneficial impact of lower mortgage interest rates resulting from the Bank of England slashing interest rates, particularly as it is still very difficult to get a mortgage."

He added that he believes house prices will fall a further 15 per cent in 2009 after a likely decline of 18 per cent this year. This would see the average house priced at £137,423 by the end of 2009, compared with a peak in August 2007 of £199,612.

Number of repossessions

  • 1990: 43,900
  • 1991: 75,500
  • 1992: 68,600
  • 1993: 58,600
  • 1994: 49,200
  • 1995: 49,400
  • 1996: 42,600
  • 1997: 32,800
  • 1998: 33,900
  • 1999: 30,000
  • 2000: 22,900
  • 2001: 18,300
  • 2002: 12,000
  • 2003: 8,900
  • 2004: 8,200
  • 2005: 14,600
  • 2006: 20,900
  • 2007: 26,200
  • 2008: 45,000 (estimate)
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