Jump to content
House Price Crash Forum
Sign in to follow this  
bluebeard

Britons Overwhelmed By Debt - Repossessions Up 70%

Recommended Posts

Extracts from p.14 of Dail Mail today:

The scale of the country's debt crisis was further highlighted by figures showing the number of homeowners who risk losing their property through reposession is the biggest since the recession of the early 1990s. A record 23,351 were overwhelmed by debts in the first three months of this year according to figures from the government's insolvency unit - the same as the number becoming insolvent in the whole of 1998.

The number of homeowners who face losing their homes is at the highest levels since the early 1990s when Brtitain was struggling with mass unemployment, high interest rates and a crash in the housing market. Figures published yesterday by the Department For Constitutional Affairs show the number of reposession orders made by courts in England and Wales, during the first quarter of this year, jumped by 56 per cent compared with the same three month period last year.

The government tried to calm fears of a return to the 1990s when thousands lost their homes. It pointed out that only a small numnber of the posession orders issued lead to homes being reposessed. But the number of reposessions is still rising sharply, up from about 6000 in 2004 to 10,250 last year.

Share this post


Link to post
Share on other sites

I wonder if it is possible for bankruptcy to mask repossession statistics?

As I understand, when you go bankrupt your lender automatically takes the house with no need for repossession proceedings. Is that right?

T&T

Share this post


Link to post
Share on other sites

Extracts from p.14 of Dail Mail today:

The number of homeowners who face losing their homes is at the highest levels since the early 1990s when Brtitain was struggling with mass unemployment, high interest rates

I wonder whether anyone else has spotted the parallel with what is happening in the NHS?

The NHS is suffering large redundancies at a time when NHS funding has never been higher (budget doubled in the last 5 years).

Of course both are symptomatic of a nation borrowing from its future in extremis. Both situations beg the question "and what if we hit speed bumps?"

Edited by Sledgehead

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp

I wonder if it is possible for bankruptcy to mask repossession statistics?

As I understand, when you go bankrupt your lender automatically takes the house with no need for repossession proceedings. Is that right?

T&T

I believe you cannot go bankrupt if you have equity in your property, many lenders now apply for an additional charge against your property to secure the unsecured debt.

Share this post


Link to post
Share on other sites

Extracts from p.14 of Dail Mail today:

The scale of the country's debt crisis was further highlighted by figures showing the number of homeowners who risk losing their property through reposession is the biggest since the recession of the early 1990s.

Read again ! "WHO RISK LOSING THEIR PROPERTY" not have lost their property!

Share this post


Link to post
Share on other sites

Read again ! "WHO RISK LOSING THEIR PROPERTY" not have lost their property!

"But the number of reposessions is still rising sharply, up from about 6000 in 2004 to 10,250 last year." These have lost their homes already (up 70% 2005 v 2004). The latest reports show a further 56% rise in repossession court orders (1Q2006 v 1Q2005) which the article suggests looks likely to lead to another significant rise in actual reposessions during 2006.

Share this post


Link to post
Share on other sites

I believe you cannot go bankrupt if you have equity in your property, many lenders now apply for an additional charge against your property to secure the unsecured debt.

Not true. Nothing stopping you declaring bankruptcy even if you have equity.

Share this post


Link to post
Share on other sites

I wonder if it is possible for bankruptcy to mask repossession statistics?

As I understand, when you go bankrupt your lender automatically takes the house with no need for repossession proceedings. Is that right?

T&T

No the lender would still have to enforce his rights against the bankruptcy estate.

In most cases the Trustee will seek to realise the equity in the property by selling back to the bankrupt (cash from a relative perhaps) or by registering a charge.

However by declaring bankruptcy and getting rid of the unsecured debt repayments the mortgage repayments and arrears have a better chance of being met.

If there is significant equity the trustee will sell normally with the bankrupts co-operation so no repossesion proceedings would ensue.

Share this post


Link to post
Share on other sites

This graph of the CML figures on mortgage arrears was posted a few months ago – it shows that the *minimum* ratio of arrears to mortgages occurred in 1989 and the maximum much later in 1992—1993. We have rising numbers now, but very small compared to the last peak, and the claim of “the biggest since the last recession in the early 1990s” (without further clarification) looks a bit shaky.

CLM table AP1, H1/2005

eun5ut.jpg

And it’s clearly important to properly distinguish between possession actions, often driven by impatient second charge lenders, and actual possessions due to mortgage difficulties.

DCA and CML statistics on repossessions

oqga5f.jpg

Edited by spline

Share this post


Link to post
Share on other sites

I wonder whether anyone else has spotted the parallel with what is happening in the NHS?

The NHS is suffering large redundancies at a time when NHS funding has never been higher (budget doubled in the last 5 years).

Of course both are symptomatic of a nation borrowing from its future in extremis. Both situations beg the question "and what if we hit speed bumps?"

If the NHS is losing jobs, and I guess this also gives an air of job insecurity to those left, then what effect will this have on Key Worker housing schemes? I always viewed these as a way to help low paid key workers afford a home, but also viewed them as keeping the housing market going as it allowed people to buy that may not be able to afford - hence adds to ongoing sales.

If these suffer as a result of the NHS job situation, then will this have an effect on HPI?

Share this post


Link to post
Share on other sites

This graph of the CML figures on mortgage arrears was posted a few months ago – it shows that the *minimum* ratio of arrears to mortgages occurred in 1989 and the maximum much later in 1992—1993. We have rising numbers now, but very small compared to the last peak, and the claim of “the biggest since the last recession in the early 1990s” (without further clarification) looks a bit shaky.

CLM table AP1, H1/2005

eun5ut.jpg

And it’s clearly important to properly distinguish between possession actions, often driven by impatient second charge lenders, and actual possessions due to mortgage difficulties.

DCA and CML statistics on repossessions

oqga5f.jpg

Yep, but the last crash was 1989 was it not?

Arrears, according to your graph, did not start before the crash last time around. (if I've got this right)????

Meaning? :

a/ The current situation is worse - MORE downside - bigger crash ahead.

b/ The crash is ALREADY underway - lagging indicators an' all that!!!!

Share this post


Link to post
Share on other sites

Yep, but the last crash was 1989 was it not?

Arrears, according to your graph, did not start before the crash last time around. (if I've got this right)????

Meaning? :

a/ The current situation is worse - MORE downside - bigger crash ahead.

b/ The crash is ALREADY underway - lagging indicators an' all that!!!!

Yeah, the housing market was in decline in 1989 but it was in 1992 (I think) that IRs reached 15% thus speeding up repos.

BTW, totally agree with a and b.

Share this post


Link to post
Share on other sites

This is the Halifax HPI during 1985 to 1995 corrected for time lags. It shows both YoY and equivalent annualised QoQ along with the BoE repo rate history. Clearly rates rose from 8% during peak HPI in 1988 to 15% in 1989-1990 forcing HPI down to zero (and slightly below) in 1990 – there then follows an extended period of negative HPI and falling IRs until 1993-1994 and a recovery starting around 1995. The mortgage arrears and possession figures peaked in 1993 just after the worst negative HPI was over.

I’m not sure how you are able to reconcile a nationwide “crash” with the price indices still increasing and the very strong mortgage approval rates we have at the moment. All the dials that are “non-lagged” are currently pointing upwards. Obviously it's likely to correct but it's not doing it at the moment.

Annualised HPI during 1985-1995

(lag corrected, thick lines=YoY, thin lines=4*QoQ)

xcmbzc.jpg

BoE interest rates 1985-1995

xcmc7s.jpg

Edited by spline

Share this post


Link to post
Share on other sites

But what's causing the repos and who's being repoed.

Is it FTBs who overstretched, is it BTLs who bought high and could not rent out, is it people who have lost jobs, is it people overwhelmed by other debts.

To bastardise someone else's phrase, this time there's a new paradigm added. All of those investors (read MEW people who have no idea how to tie their own shoelaces) who geared their investments and their own homes to the hilt to ride the coattails and don't have a clue will bump those stats up quite a lot.

As for increased bankruptcies, you make it easier to get credit, then you make it easier to abdiscate your responsibilities by making BR easier, so people will do it... - for me there's not a lot in the story until you see unemployment and interest rates rising as well....

Share this post


Link to post
Share on other sites

Give it time. The trend is up. Data from CML or DCA website if I remember correctly!

Year Number of homes

repossessed Fraction of homes

repossessed

1991 75,540 1 in 130

1992 68,540 1 in 145

1993 58,540 1 in 173

1994 49,210 1 in 212

1995 49,410 1 in 213

1996 42,560 1 in 250

1997 32,770 1 in 328

1998 33,870 1 in 319

1999 29,990 1 in 366

2000 22,870 1 in 489

2001 18,280 1 in 615

2002 11,970 1 in 949

2003 7,830 1 in 1,463

2004 6,230 1 in 1,848

Share this post


Link to post
Share on other sites

Give it time. The trend is up. Data from CML or DCA website if I remember correctly!

Year Number of homes

repossessed Fraction of homes

repossessed

1991 75,540 1 in 130

1992 68,540 1 in 145

1993 58,540 1 in 173

1994 49,210 1 in 212

1995 49,410 1 in 213

1996 42,560 1 in 250

1997 32,770 1 in 328

1998 33,870 1 in 319

1999 29,990 1 in 366

2000 22,870 1 in 489

2001 18,280 1 in 615

2002 11,970 1 in 949

2003 7,830 1 in 1,463

2004 6,230 1 in 1,848

It will be, but from your figures there's one hell of a long way to go to get even near '95/96. We are still at historical lows, though we are climbing out of them. I should suggest if you take BTL muppets out of the stats that the figures are stable with 2004.

HOWEVER, I can see them rocketing in 2008 - people will do anything to avoid losing their own house, so they will pour good money (and more importantly credit) into trying to ride it out.

Share this post


Link to post
Share on other sites

Yep, but the last crash was 1989 was it not?

Arrears, according to your graph, did not start before the crash last time around. (if I've got this right)????

Meaning? :

a/ The current situation is worse - MORE downside - bigger crash ahead.

b/ The crash is ALREADY underway - lagging indicators an' all that!!!!

yep

EDIT

sorry A and B I think you'll find

Try and remember the experience of this sucker rally. Saying that it probably wont help you identify the next. (or me)

Edited by Flat Bear

Share this post


Link to post
Share on other sites

CLM table AP1, H1/2005

eun5ut.jpg

Spline, I think you misunderstand what I am saying????? I did not explain very well!!!

The chart here shows a trend change - as close to a break out from a "tunnel" - as a tech may see (with this kind of data).

This will be IMHO a leading indicator of the near term "clean" / non lagging data as it comes through. Arrears to lead to negative HPI. Just as charts of the the real estate stocks may provide a clue to where we are going.

I may be wrong.

Top work from your goodself (again) if I may say so?

Share this post


Link to post
Share on other sites

That's only 2 years away. It'll be here quicker than expected. :) for me :( for others.

I think its already here and for some quite a while (2 years SE)

The next 5 years (only in my own opinion) will see an acceleration But as the bears in all of us says we're at the bottom but we wont be, it will get worse. What a way to play about with peoples lives. I dont wont this to happen but it will............... I wont make any money out this colapse and hopfully nobody else will either. (I know I Know somebody always does)

Share this post


Link to post
Share on other sites

I think its already here and for some quite a while (2 years SE)

The next 5 years (only in my own opinion) will see an acceleration But as the bears in all of us says we're at the bottom but we wont be, it will get worse. What a way to play about with peoples lives. I dont wont this to happen but it will............... I wont make any money out this colapse and hopfully nobody else will either. (I know I Know somebody always does)

I am intrigued as to why people think that thr SE will be hit hardest, it's got the highest wages, the most jobs and it's had the lowest relative increases in prices - I think it's the northern towns that will get mullered and the City centres with 'executive' chav flats will be annihilated unless they offer something different.

I only see repos in the SE on what look like BTLs by amateurs. I see a ready market around London for rentals and just about the only places I see not rented out for long periods are overpriced or newbuild flats [iMO].

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.