Friday, May 15, 2009
I thought Zanu Lbour had abolished this
BBC News: UK repossessions up 50% in a year
The CML has predicted that 75,000 homes will be repossessed in 2009, almost double the 40,000 of last year.
Posted by matt_the_hat @ 10:19 AM (1573 views) Add Comment
21 Comments
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1. nubbers said...
In 1991, when reposessions peaked at 75000, we were still a long way from the bottom of that HPC. Anyone thinking of buying a house just now, take note.
2. icarus said...
Will the repossessed houses be put on sale, causing further price falls, or will they be kept off the market and stay on lenders' books at artificially high values?
3. mark wadsworth said...
Ah yes, but under the heartless Tories the repossessed were left to fend for themselves, whereas a repossession under a caring, sharing Labour government is a far more wholesome and uplifting experience, allegedly. Which Labour will no doubt blame on the Yanks and the Banks and Thatcher's deregulations of two decades ago anyway
4. little professor said...
This rise in repossessions is despite all the governments schemes to aid homeowners in trouble; they've also pressured the banks heavily to avoid seeking repossessions, and have rather dodgily issued advice to judges not to side with lenders in repo hearings unless every effort has been made to avoid it.
5. george monsoon said...
The debt mountain will end up in the hands of the helpless, as it always does, and the ones that engineered this mess will just end up more powerful than ever.
6. cyril said...
The last time reposessions were this high, interest rates were about 10% weren't they? Quite amazing to consider how many people can't pay their mortgages nowadays when rates are so low now.
7. montesquieu said...
@ cyril
Spot on, an observation not made in any of the punditry I've seen on this.
8. timmy t said...
I heard something on that BBS Property program on Wednesday night which I hadn't heard before, but they didn't make a big deal of it... I'm sure they said that BTL repossessions aren't classed as repossessions because they are houses owned by companies going into administration so treated differently. If this is right and these numbers don't include BTL then this is another good example of statistics saying one thing but reality being a whole lot worse. Does anyone know whether they are included?
9. timmy t said...
BBS? BBC!
10. happy mondays said...
@ George
No, i think there time is shortly up.. You can see the reaction of joe public about the low life mp's, on question time last night a lot of anger coming out, people will only go to the cliff edge, some will jump, others will fight back...
11. mark wadsworth said...
@ Timmy T, see the article from Metro I posted after this.
@ Cyril, seconding what Monty says, exactly, the average mortgage debt relative to income must be at least 50% higher than in 1990, so if actual rates go to 7% or something all Hell will break loose.
I am reliably informed that the average interest rate for many owner-occupiers is currently 4% or 5%, so it only needs a modest uptick in interest rates (which is sure to come as night follows day) and it will be like [insert catastrophe of choice].
12. inbreda said...
@8 - yes I heard that one too timmy t.
I too am wondering what the real figure is.
In terms of reality being a lot worse, combine the missing BTL repos with the points above about IRs only being 0.5% and market IRs also being very low, and you can see why this market is going to overshoot massively. We have a long way to go.
13. inbreda said...
one further point - if BTLs are set up in a business framework, then - on top of all the tax incentives for BTLers - does that not mean that unlike FTBs BTLers will be able to hand in the keys and walk away letting the BTL company fold, with no adverse affect to them or their credit rating?
I think we may have all missed out on a one way bet.
14. James said...
BBC: Losing your home is traumatic.
WTF is being forced to rent and losing tens of thousands year on year for a DECADE?!!
BBC = 10 Years of V-E-S-T-E-D I-N-T-E-R-E-S-T
60% + Reductions.
15. stillthinking said...
I agree that rising interest rates will be an absolute killer, but I am not sure that they will ever rise. because;
Interest rates do not directly affect inflation, they affect the costs of borrowing and it is borrowing which affects inflation. so kind of the same but not really. so interest rates are only one mechanism to stop inflation. however they are the free market way of controlling borrowing because they still give choices.
anyway, you can control inflation without raising interest rates if you can control borrowing by some other means. by legislating against loans as has already been suggested, or by modifying capital ratios of the banks as has already been suggested. or ultimately just using legislation to prevent borrowing.
slightly harder to stop excessive spending but that isn't a problem without an inflationary scare. so, I think that because as pointed out, interest rates -cannot- go up, the corollary would be borrowing restrictions through legislation. which is of course bad news for house prices. but I think the government has moved on from house prices because they understand the real problem is the breakdown in real economic activity aka unemployment. reducing unemployment is hopefully the no.1 policy goal now.
that notwithstanding i think deflation is very sticky and chronic though the following inflation will be, I don't see any sign of it and acting as though we are now today on the verge of inflation is a bit premature. unemployment is rising so wages will not be rising.
my point is that if the government borrows and continues to need a huge amount of borrowing then they -cannot- use interest rates to stop borrowing! of course not, they are the guilty culprits themselves. so instead they must prevent the private sector from borrowing, as in either we or the government borrows but not both. both scenarios see continuing falls in house prices as you would expect because they are -overpriced=!..
16. timmy t said...
MW - 1700 "people" hand properties repossessed - not 1700 properties were repossessed... The woman on the telly had 50! there's your 85000 right there!!!
I'm still not clear on the protocol - what do you know about it? Are the numbers included?
17. Chf said...
Many BTL were done as a ltd co, as far as im aware. These do not show up in repo stats
18. icarus said...
With regard to mortgage costs in the late 80s and early 90s compared with nowadays - back then there were lots of 'mis-sold' endowment mortgages. Did this add a lot to monthly costs then compared with now? Anyone know?
19. Philip9134 said...
stillthinking If the pound were to drop, the government of the day will have no choice but to increase the interest rates. What would be the damage if the Euro were were 2 Euros to the pound? Naturally having such a strong manufacturing country it may not have much of an effect.
20. peeping tom said...
good point, icarus @#2, though it's unlikely that lenders will want to keep to keep property on their books to wait for an upturn which may be a long way off, when they need to replenish their own coffers as soon as possible. IMO repossessed properties will be sold on as quickly as possible. Only if all the lenders acted in partnership - and none of them had huge debts themselves - could repossessed properties be left empty to create an artificial shortage and thus drive prices up again.
21. alan said...
@stillthinking,
I know Japan kept rates low for a long time, but we are in a worse situation. Darling is hoping to push UK debt to £700bn. Finding lenders may be hard! Soon he will be forced to put up IRs and give a better return. Watch the next Gilt auction carefully!
If lenders are not prepared to lend, the UK are forced to go to the IMF. The IMF will give a list of "things to do" like cut services, raise taxes and increase IRs.
I reckon IRs will rise before Christmas. Maybe time to lock into a long term fixed rate while we can.