News that repossessions have fallen has failed to impress one mortgage finance specialist, who says latest figures do not represent what is now happening in the market.
Mark Blackwell, managing director of financial IT specialist xit2, said: “Our repossession exchange, Rex, has already seen a conspicuous uplift in repossessions for one lender.”
He added: “We’re just seeing the deck chairs being arranged.
According to the latest figures from the Council of Mortgage Lenders, the number of properties taken into possession by first charge mortgage lenders in the first half of 2011 was 7% lower than in the first half of 2010.
Its data shows 9,000 repossessions in the second quarter of the year, slightly lower than the total of 9,100 in the first quarter, bringing the total to 18,100 for the first half of the year, compared to 19,500 in the first six months of 2010.
The total number of mortgages in arrears was also broadly unchanged in the second quarter of the year. There was a slight increase in the number of mortgages with low levels of arrears, but a reduction in the number in deeper arrears.
The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance edged up from 77,800 to 78,500. But those in arrears of more than 2.5% of the balance declined from 166,700 to 164,500.
Overall, the number of mortgages more than 1.5% in arrears declined to 243,000 in the second quarter of this year, from 244,500 three months earlier.
The CML confirms that it is not making any revision to its arrears and possessions forecasts on the basis of experience in the first half of the year. The current forecast is for a repossession rate of 0.35% this year, and 0.4% in 2012, equating to 40,000 cases of repossession in 2011 as a whole, and 45,000 next year.
On arrears, the forecast is for a steady position of 180,000 mortgages in arrears of 2.5% or more of the balance, representing 1.58% of the total 11.3 million stock of first-charge mortgages.
CML director general Paul Smee said: “Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates. Despite current uncertainty in financial markets, we see no need to revise our forecasts.
“It is clear from the low rate of repossession that lenders do want to keep people in their homes, and are successfully doing so in the vast majority of arrears cases. Repossession really is seen as a last resort.”
However, industry analysts were less impressed.
Ian Long, managing director of St Trinity Asset Management, said: “With mortgage rates at exceptional lows, millions of mortgage holders have been enjoying artificially low monthly payments. However, this should not create a false sense of security for borrowers.
“Repossession numbers have remained low, but with fears over the weak economy and its impact on the labour market, they will begin to climb steadily.”
Mark Blackwell, of xit2, said: “Arrears and repossessions remain low for now, but arrears and repossessions are like an iceberg waiting to hit the property market – there is a lot of trouble hidden out of sight, just below the surface.
“Our repossession exchange, Rex, has already seen a conspicuous uplift in repossessions for one lender, probably driven by a change in forbearance rules. As these become less generous across the industry, we’ll start to see more of the iceberg that’s been lying unseen, under the water line.
“The UK has remained an island of relative calm amidst the economic storm engulfing Europe, but growth has been sluggish. Borrowers have already seen their household budgets ransacked by high inflation and stagnant growth, even though we have yet to feel the pinch from the Government’s fiscal austerity programme.
“When this arrives there will be more redundancies, pay cuts and fewer salary rises, meaning the UK’s property market is almost certain to be hit by a titanic rise of arrears and repossessions.
“Any positivity suggested by these figures is not representative of positive trend – we’re just seeing the deck chairs being rearranged.”
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