Wednesday, January 31, 2007

Sharp rise in repossessions in 2006 before 3 interest rate rises take full effect

Repossessions rise by sixty five percent in a year - CML

The number of mortgage repossessions rose from 8,140 in the first half of 2006 to 8,860 in the second half, according to figures released to day by the Council of Mortgage Lenders. This brings the total for 2006 to 17,000 - 65% higher than in 2005, but broadly similar to 2001 levels and roughly 1 in 690 mortgages.

Posted by converted lurker @ 10:35 AM (6 views)
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11 thoughts on “Sharp rise in repossessions in 2006 before 3 interest rate rises take full effect

  • If this is the start of the curve, then one can only imagine where it will peak – difficult times ahead.

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  • Harold

    I hope you are right but I can not see how difficult the “difficult times ahead” will be. I suspect no difficult enough. There is no breakdown here of what mortgages have been in default. Are they the sub-prime mortgages – which wouldn’t be any surprise. Are they the vast BTL mortgages on flats? Are they the mortgages supplied to hard working families in 3 or 4 bedroom homes? The overall effect will be very different depending which mortgages are defaulting.

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  • I find it amazing that they predict the number of repos will only increase by 1000 in 2007. I assume that you need to be at least 6 to 12 months in arrears before the threat of repossesion – the interest rate increases over the last 6 months will only now be starting to hurt those that were running a tight budget in 2006. My guess is that 2007 will see a simliar increase in numbers to 2006 – maybe more if interest rate continue to increase.

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  • What irks me with these reports about repossesions is they always say, “oh, repossessions are rising steeply but they are nowhere near those of the early 90’s”. It’s as if that somehow makes it all ok.
    I see Coogan of the CML is doing the same in the quote from the “firstrung” article.

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  • I think Denzil makes a very, very good point. The repossession rate in the early 1990s is culturally linked to falling house prices. By stating the rate of repossession is nowhere near that of the 1990s, it gives the appearence that the link between the two is broken. So don’t worry if the market risks being flooded by auctions of repossessed houses, property prices can only ever go upwards.

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  • TR, not sure that the type of repossession makes much difference. Basically, banks shifting bad-debt stock at any cost causes HPC. How they come by the bad-debt stock doesn’t really matter. However, it would be good to have more data/analysis in the article.

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  • They don’t know the half of it – they are still lending to the defaulters of tomorrow, like there is no tomorrow!

    I’ve just dealt with the tax return for someone who has 2 let properties. She bought the first in the mid 80’s for around £30k, moved out in the mid 90’s, when she was struggling to pay the mortgage, and let it out. History tells us that this was a lucky strike, because when she was back on her feet, she bought somewhere else and kept the first house. All good so far – don’t we all wish we’d done that?

    But then I find out that house #1 has been remortgaged over and over and now has a mortgage of, wait for it, £144k. Part of that went as a deposit on house #2, but that too has since been remortgaged and now has little or no equity.

    Meanwhile, egged on by her ‘financial adviser’ she has recently moved out of #2 and bought house #3…

    After paying all the mortgage interest, repairs etc., there is no profit from the lettings. Her other income is about half the national average, probably insufficient to live on (although she’s single), and she seems to be supplementing this from MEWing. If anybody had taken a good look at her finances, there is no way on earth that she would have been allowed to buy house #3.

    When I asked her why she kept remortgaging, she told me that she has to change mortgages to get another cheap deal, otherwise she wouldn’t be able to afford the SVR(!) – she just finds it convenient to release a bit more equity as she goes…

    I told her I was worried about how she would cope with further interest rate rises – she’s confident that (although having never made a profit before), she will be in profit next year…

    And to think that she doesn’t appear on any, not any, statistics that are used to tell the state of the property market or the economy. Not yet, at least…

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  • Bidin.

    This woman must be a CHAV of the first order. She has no intention of paying it back.

    Shop her for stealing.

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  • Bidin,

    Interesting… As a litgation lawyer I watch and wait, someone I know said where there is misfortune there are always lawyers behind!

    Might be bad for the gopher tho and blur…

    If people like that do hit the fan then who will pay the stamp duty and taxes etc.. for the economy stupid?

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  • Bidin’

    Many thanks for that report. I am absolutley stunned. I can not believe that this woman is so daft – it is lucky she is single. If in a partnership, she might breed and the stupidity gene would be further promulgated in the UK gene pool. This is scarey – very scarey. Her independent financial advisor clearly needs to be shot; or perhaps the independent advisor has a stack of cash locked away in a high interest bank account and is waiting for the HPC so he/she can mop up properties in the aftermass. Just call me “JU”.

    By the way, I do not read the Daily Mail or the Daily Express.

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  • Bidin’ – I can trump your stupid CHAV woman with a mother/daughter team that I’ve just seen (2 minutes ago) on ‘Under the Hammer’, one of the PLETHORA of property porn for idiots programs.

    They’ve just bought (at auction, of course) a terraced property without viewing it. They’re trying to make it rich as property developers. They’ve paid a 7 grand deposit post auction (successfull bid of £60,000) and then gone to get a mortgage. First survey said “the property is unmortgageable” on account of the bowing walls, bowing floors, hideous damp problems etc etc so they risked losing their deposit. The ladies guessed it would cost £2,000 to do up, and I quote “…to do some cosmetic stuff like the floors and some paint, and stuff and maybe a fridge for the kitchen”. genius. So in the end they put it on the market for 72 grand having done nothing to it!?!?!?

    They think it is that easy – but then while there are people as stupid as them with easy access to credit, I guess the only way for house prices is up!!

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