CML more optimistic on repossessions

The Council of Mortgage Lenders (CML) has officially reduced its forecast for repossessions for the year by 10,000, after admitting last month that its previous ­prediction of 75,000 was pessimistic.

The trade body now also expects around 360,000 mortgages to be in arrears by the end of the year.

The revision follows calls from industry figures earlier this year to reassess the prediction, after statistics released by the CML for 2008 were more positive than the 45,000 previously forecast ("Action by lenders helps to restrain repossession figures", mortgagesolutions-online.com, 23/02/09).

The CML noted that while conditions in the housing and mortgage markets remained "extremely challenging", existing borrowers were gaining some significant benefits from the effect of lower interest rates.

This factor, taken together with the significant levels of forbearance being shown by lenders and the Government's interventions to improve support for some struggling home-owners, has resulted in the revision.

A spokesperson for the CML, commented: "The raft of measures taken by the authorities have stabilised the economy and will sow the seeds for a recovery over time, including in the housing market. But the improvement is likely to be slow and drawn out, especially as the extensive fiscal, monetary and credit support measures are gradually unwound."

Ray Boulger, senior technical manager at John Charcol, said he thought the new estimate was in the "right ball park".

He explained: "The CML was right to re-evaluate the initial figure, as lenders are not as quick to repossess as they were in the last recession. There is less risk for lenders to allow borrowers to stay in their property and at least pay some money back. This is a sensible commercial judgment on their part."