The Council of Mortgage Lenders (CML) has reduced its forecast for house repossessions to 48,000 for the year. Last year they estimated the number would be 75,000 in 2009, but revised it to 65,000 in June, and again today. A combination of lenders exercising patience with borrowers in difficulty, government assistance for borrowers and low interest rates are credited as the reasons behind the falling numbers. CML director general Michael Coogan said: “Although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time. " While this is good news for everyone involved, including the lenders, I don’t think it’s the end of the story. As Mr Coogan said, most interest rate forecasts do expect rates to stay low for some time but they differ in when and by how much they think rates will rise. What they do agree on is that RATES WILL RISE. This is most likely to be when the prospect of rising inflation prompts the Bank of England to raise the cost of borrowing, which will have the same effect on mortgage rates. At this time, the economy will still be in the recovery position, when unemployment numbers are relatively high, and many borrowers employment still fragile, conditions which could lead to a rise in repossessions. Government schemes will play a part in helping borrowers to remain in their homes. Already 200,000 homeowners will have benefited from the Support of Mortgage Interest scheme, but as there are almost 2.5 million people unemployed in the UK, I don’t think we should rely on it particularly as not everyone will qualify and the benefits are limited. Government schemes If ever there was a good time to give serious consideration to how you should protect your mortgage, it’s now, but be sensible about your budget. Of course it’s a good idea to take protection in case of accident, redundancy, death, and serious illness, but if that’s a step too far (which it will be for lots of borrowers), having some cover which you can afford is better than doing nothing, particularly during this period of uncertainty.
Repossessions Forecasts Cut