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CML remains optimistic over mortgage arrears

28th July 2005 | back to article listings BACK    print this article PRINT

The Council of Mortgage Lenders (CML) has announced that both the number of people failing to keep up with mortgage repayments and property repossessions are at "extremely low" levels in a historical context, despite an increase in repayment failures and repossessions last year.

The CML states that incidences of mortgage arrears and repossessions are expected to rise marginally between now and 2008, but stresses that a crisis is unlikely to emerge, as did in the early nineties. According to figures from the CML, which represents banks, building societies and other mortgage lenders, the number of properties that have repossessed in recent times increased to which represents banks, building societies and other mortgage lenders, up from 3,070 in the second half of last year.

However, the organisation asserts that the repossession rate at the half-year mark was in the region of one in 2,500 properties, as opposed to a peak of one in 250 mortgages in the second half of 1991. Commenting on these developments, CML's deputy director general, Peter Williams said that the second half of 2004 represented a "trough" in the number of mortgage arrears and possessions.

"Arrears and possessions now look set to rise a little, but only to the sort of levels experienced in the past few years," he stated. "A re-run of the early 1990s is certainly not on the cards."

It has been reported that the CML is currently working with the government and industry stakeholders to limit the number of repossessions and counter rising arrears levels.

Last month saw a marked increase in mortgage lending throughout the country, according to reports from the CML and British Bankers Association (BBA), with figures indicating a total of £25.8 billion, up from £22.3 billion in May. The increase suggests a definite return to confidence in the housing market among UK borrowers as more people decide to commit to mortgage deals, and mortgage lending to those actually buying homes has risen sharply; strong indication of market confidence. Lending for property purchase rose from £9.9 billion in May to just under £12 billion last month, and growth is widely expected to continue into the end of the year.

In related news figures from the Office of the Deputy Prime Minister (OPDM) have confirmed that house prices in May were six per cent higher than for the same period a year earlier, compared to 6.9 per cent higher in April. Though strong, growth in the market is definitely slowing, indicating increased stability towards the end of the year and into 2006. The ODPM also reveals that at in May, house prices stood at an average of £182,651, a rise attributed largely to increases in the prices of terraced and detached prices. Conversely, prices for flats stayed constant while average prices for bungalow and semi-detached prices fell 0.9 per cent and 0.2 per cent respectively.

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