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Home Repossessions Soar

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Guest consa

From the Blog

HOME repossessions are increasing sharply as more borrowers default in the face of mounting consumer debt.

Figures suggest that the strain is starting to tell on overborrowed households despite low interest rates.

The second quarter of this year showed a 61% leap in repossession actions by mortgage lenders compared with the same period last year.

A further increase is expected when third-quarter figures are published on Wednesday.

http://www.thisismoney.co.uk/mortgages/art...45&in_page_id=8

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Interestingly, the huge 61% leap in repossession actions quoted above appears to reflect nervous lenders rather than the underlying rate of arrears :unsure: – see this graph, CLM table AP1, H1/2005.

eun5ut.jpg

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Guest consa

Interestingly, the huge 61% leap in repossession actions quoted above appears to reflect nervous lenders rather than the underlying rate of arrears :unsure: – see this graph, CLM table AP1, H1/2005.

They can't repossess until 3 months arrears are showing is the graph up to date? if this is the case we are going to be hit with a massive influx of arrears cases, or are people just throwing in the towel cos they realise the debt is just too much to bear?

Edited by consa

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I guess it must be problems with smaller second loans secured against the house that are triggering the recovery action – so maybe this is more about personal debt and consumer spending than housing, but clearly linked via MEW and additional secured borrowing. Or even the practice of selling a mortgage and second loan alongside to sidestep the earnings multiple constraints?

Edited by spline

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Guest Bart of Darkness
Figures suggest that the strain is starting to tell on overborrowed households despite low interest rates.

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Interestingly, the huge 61% leap in repossession actions quoted above appears to reflect nervous lenders rather than the underlying rate of arrears :unsure: – see this graph, CLM table AP1, H1/2005.

eun5ut.jpg

Depending on what we see on Wednesday (Q3 figures due out on 26/10/05) we can decide if the huge upswing in Q1 and Q2 numbers of part of a bigger (worrying) trend. Look at how the curves for arrears in the late 80s took off and look at how the graphs in Charlie's Q2 PDF is taking off...

Most interestingly, (and please correct me if this assumption is wrong), they way I read the CML table posted by spline the last "HPC crash" started well before arrears (and thus repossessions) took off. I think in press/VI/general public perception terms (which are based on volume, common experience etc) this is a lagging indicator and we should not expect to see plentiful stories of terrible arrears or repossessions until towards the latter half of the downturn, say 2007-2008 (and they will then reinforce the next "bottom"). The observant (ie HPCers focussing on the rate of increase as opposed to volume) can however add it to the list of possible early indicators and quietly observe a further big uptick in Q3 reposessions as a bearish sign IMO.

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Posted by TMT on another thread, but possibly relevant here - the use of charging orders to blur the distinction between secured and unsecured loans.

Lenders aim to put homes at risk to recover credit card debt - Times Online 24/Oct/2005

http://www.timesonline.co.uk/newspaper/0,,...1840507,00.html

Edited by spline

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Just bringing this to the top for tomorrow morning - new quarterly reposessions numbers due from CML on 27th. No-one is looking for big numbers in absolute terms but the feeling is that the siginificant upturn in trend over the first 2 quarters will continue/increase.

Let's see.

Edited by Tempest

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Picked up by Reuters, today

Mortgage repossession actions soar [Wed 26/Oct]

link: http://investing.reuters.co.uk/news/newsAr...EPOSSESIONS.xml

LONDON (Reuters) - The number of mortgage repossession orders made in the third quarter of 2005 in England and Wales soared 66 percent on the year, the government said on Wednesday.

The Department of Constitutional Affairs said a total of 19,687 orders were made in the three months to September. Of these, 10,340 were suspended orders.

In the same period, the number of actions entered was up 55 percent on the year at 29,991.

Charlie's thread with links to the DCA publications

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=221024

Edit:

The story developing here (or at least one strand of it) seems to be that although the level of repossessions due to mortgage arrears is still is very low, and only increasing slowly, it appears that we have ‘cross-linkage’ from recovery action against credit card arrears, over drafts, and other ‘unsecured’ loans, contributing to the increase in repossession activity.

Edited by spline

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When they suspend these repo orders or give you time to sort out your mess (as if someone ignorant of finance up to their eyeballs in debt can do that) they do not say "come back in a few years and hopefully all is well".

No, they say "what are you going to do about it? You have x months to sell your house or repay the debt, if not the suspension order will be lifted and the bank will repossess your home". It is as simple as that. My mate had wife and a baby and that was the only reason he got a few months breathing room in his suspension order. Thankfully he sold at top of market and cleared the debt. Can't say that for those delaying the inevitable now.

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...not that it's a nice thing to hope for others to lose their homes IMO.

I reckon most of the repossessions will be failed Buy-To-Lets rather than unfortunate familes flung out on to the streets.

In which case, no sympathy here. :D

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I wish you were right but as someone who is privy to the details of these things, most of these figures comprise of normal people that have got in way over their heads as a direct consequence of over-inflated property prices.

People like you and me as it happens, who for one reason or another, have fallen on hard times.

Don't forget, those that are in a position to play the BTL game, tend to be more affluent than your average Joe and are more likely to be able to ride it out for longer or rely on the support of banks, family and friends to help them out should the need arise.

If you look closer, you'll find some very tragic stories behind a lot of these headlines I'm afraid but if it eases your conscience then by all means convince yourself that it's only landlords that get stung...

IMO they're just as much victims as those that have been priced out of the market all together.

If that is the case then I have a fair amount of sympathy for these people.

However, I still stand by my position that a house price crash, which will cause misery for many in the short to medium term, will be of long-term collective benefit to the country.

Unfortunately the real culprits in all this (i.e. the irresponsible lenders and the government who allowed the boom to happen) will probably get off scot free.

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It's on their Website as well.

http://news.bbc.co.uk/1/hi/business/4377938.stm

Lenders are blaming the IR rises, maybe they should be blaming the fact that many people have little understanding of what they are doing when they take out a mortgage (see second link).

http://news.bbc.co.uk/1/hi/business/4374892.stm

From the above BBC link

"In July, the Council for Mortgage Lenders (CML) said there were 4,640 homes repossessed during the first half of 2005 compared with 3,070 for the previous six months.

Lenders have blamed rising repossessions on five interest rate rises between November 2003 and August 2004.

In August this year, UK interest rates were cut by the Bank of England's Monetary Policy Committee from 4.75% to 4.5%.

The CML has predicted that more than 10,000 homes will be repossessed by the end of the year.

However, repossessions are still set to be much lower than the long-term average of 30,000, or the peak of 70,000 a year recorded during the early 1990s property market crash. "

Taking some figures out of the above I wonder if this is a good indication of the crash time frame ?

So thats a 50% increase in 6 months, but still only going to be 10,000 by the end of the year.

It seems that we have a fair way to go to get to the 30,000 long term average or the peak 70,000 crash peak, or do we ?

If we increase by 50% every 6 months taking a linear extrapolation and rounding the base figures:-

2005-1 3000

2005-2 4500

2006-1 6750

2006-2 10125

2007-1 15188

2007-2 22782

2008-1 34173

So is 2008 first quarter full on crash speed time ?

2008-2 51260

2009-1 76890

And is 2009 first quarter the crash peak ?

These numbers pile up pretty quickly and thats using a linear model, most things in nature behave exponentially with a degree of damping due to external infulences, so i suspect we get a rather more rapid initial response with some damping towards the end (S-Curve), however generally the peak is the same.

How relevant do you think repossesion figures are ?, it would be interesting to get the 1980 onwards data for repossesion figures so that I can trend it properly and apply a more accurate model, does anyone have the data ?

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From the above BBC link

"In July, the Council for Mortgage Lenders (CML) said there were 4,640 homes repossessed during the first half of 2005 compared with 3,070 for the previous six months.

Lenders have blamed rising repossessions on five interest rate rises between November 2003 and August 2004.

In August this year, UK interest rates were cut by the Bank of England's Monetary Policy Committee from 4.75% to 4.5%.

The CML has predicted that more than 10,000 homes will be repossessed by the end of the year.

However, repossessions are still set to be much lower than the long-term average of 30,000, or the peak of 70,000 a year recorded during the early 1990s property market crash. "

Taking some figures out of the above I wonder if this is a good indication of the crash time frame ?

So thats a 50% increase in 6 months, but still only going to be 10,000 by the end of the year.

It seems that we have a fair way to go to get to the 30,000 long term average or the peak 70,000 crash peak, or do we ?

If we increase by 50% every 6 months taking a linear extrapolation and rounding the base figures:-

2005-1 3000

2005-2 4500

2006-1 6750

2006-2 10125

2007-1 15188

2007-2 22782

2008-1 34173

So is 2008 first quarter full on crash speed time ?

2008-2 51260

2009-1 76890

And is 2009 first quarter the crash peak ?

These numbers pile up pretty quickly and thats using a linear model, most things in nature behave exponentially with a degree of damping due to external infulences, so i suspect we get a rather more rapid initial response with some damping towards the end (S-Curve), however generally the peak is the same.

How relevant do you think repossesion figures are ?, it would be interesting to get the 1980 onwards data for repossesion figures so that I can trend it properly and apply a more accurate model, does anyone have the data ?

So you are now saying the HPC has been postponed to Q1 2008 ???? I remember when the bears / missed the boaters used to swear blind that it began in summer 2004 !!!!!!!!!!!!!!!!!!!!!!!!!!

Hope that Helps.

PG

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So you are now saying the HPC has been postponed to Q1 2008 ???? I remember when the bears / missed the boaters used to swear blind that it began in summer 2004 !!!!!!!!!!!!!!!!!!!!!!!!!!

Hope that Helps.

PG

Ok, but people were saying it started in August 2004, a date that can only be proved with time, however 1989 was the peak, "Crashes" don't actually happen overnight, a lot of people say it'sa 17 year cycle 13 years rise, 3 years crash and a bit of a lull in the middle.

Afterall if a plane looses a couple of engines you've a few thousand feet to drop before it's pasty time.

I fully believe it's started, there is no doubt about that, but I thought it would be interesting to try and predict the peak.

After all with a crash underway it pretty pointless talking about when the crash is going to start isn't it !

Horse - Stable door etc ?

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Guest Riser

Does anyone have a link to historical data for home reposesions.

Also I seem to remember the government had a scheme thet uses a different term to repossesion or bankrupcy just to keep the numbers down does anyone have a link

TIA

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Does anyone have a link to historical data for home reposesions.

Also I seem to remember the government had a scheme thet uses a different term to repossesion or bankrupcy just to keep the numbers down does anyone have a link

TIA

In the case of bankruptcy many people enter a VIA (Voluntary Insolvancy Arrangement) and avoid the term bankruptcy. It is however the same thing with respect to your credit record and if you break it bankruptcy follows very swiftly.

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So you are now saying the HPC has been postponed to Q1 2008 ???? I remember when the bears / missed the boaters used to swear blind that it began in summer 2004 !!!!!!!!!!!!!!!!!!!!!!!!!!

Hope that Helps.

PG

No. You are quite wrong.

For example: arrears during the last crash were at a minima in 1989 and peaked in 1993.

As you know, the crash began in 1989. So if we are passed the minima (which was mid 2004), we are already into the crash. When arrears/repossessions peak, we will be near the deepest price point, i.e. the crash will have happened by 2009.

This isn't new - Dr Bubb has explained this to you over and over again at the S-Pig. You keep claiming to be surprised when we say the falls started in 2004 and will continue into 2009. When will you learn?

Data for repossessions is available FoC from the CML free stats page (www.cml.org.uk), but on a semi-annual basis only. There is more data on arrears, which I find more informative.

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From the above BBC link

"In July, the Council for Mortgage Lenders (CML) said there were 4,640 homes repossessed during the first half of 2005 compared with 3,070 for the previous six months.

Lenders have blamed rising repossessions on five interest rate rises between November 2003 and August 2004.

In August this year, UK interest rates were cut by the Bank of England's Monetary Policy Committee from 4.75% to 4.5%.

The CML has predicted that more than 10,000 homes will be repossessed by the end of the year.

However, repossessions are still set to be much lower than the long-term average of 30,000, or the peak of 70,000 a year recorded during the early 1990s property market crash. "

Taking some figures out of the above I wonder if this is a good indication of the crash time frame ?

So thats a 50% increase in 6 months, but still only going to be 10,000 by the end of the year.

It seems that we have a fair way to go to get to the 30,000 long term average or the peak 70,000 crash peak, or do we ?

If we increase by 50% every 6 months taking a linear extrapolation and rounding the base figures:-

2005-1 3000

2005-2 4500

2006-1 6750

2006-2 10125

2007-1 15188

2007-2 22782

2008-1 34173

So is 2008 first quarter full on crash speed time ?

2008-2 51260

2009-1 76890

And is 2009 first quarter the crash peak ?

These numbers pile up pretty quickly and thats using a linear model, most things in nature behave exponentially with a degree of damping due to external infulences, so i suspect we get a rather more rapid initial response with some damping towards the end (S-Curve), however generally the peak is the same.

How relevant do you think repossesion figures are ?, it would be interesting to get the 1980 onwards data for repossesion figures so that I can trend it properly and apply a more accurate model, does anyone have the data ?

The basis of these figures appear to be flawed, correct me if I am wrong. Quoting from BBC business news-

"Mortgage repossession orders during the past three months in England and Wales were up 66% on a year ago to nearly 20,000, official figures have shown. "

Would not that be 80,000 yoy if these figures did not accelerate which I dought. What was the peak repo rate in the 90's bust per year does anyone have figures.

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No. You are quite wrong.

For example: arrears during the last crash were at a minima in 1989 and peaked in 1993.

As you know, the crash began in 1989. So if we are passed the minima (which was mid 2004), we are already into the crash. When arrears/repossessions peak, we will be near the deepest price point, i.e. the crash will have happened by 2009.

This isn't new - Dr Bubb has explained this to you over and over again at the S-Pig. You keep claiming to be surprised when we say the falls started in 2004 and will continue into 2009. When will you learn?

Data for repossessions is available FoC from the CML free stats page (www.cml.org.uk), but on a semi-annual basis only. There is more data on arrears, which I find more informative.

Great, ta very much.

It's at http://www.cml.org.uk/servlet/dycon/zt-cml...s_stats_AP4.xls

Mortgage Possessions

How many ss's in RePossessions, more than Mississippi

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