The number of mortgages in serious arrears is set to double next year as conditions in the housing market continue to deteriorate, the Council of Mortgage Lenders said yesterday.
The CML, which represents most of the nation’s mortgage providers, predicted loan repayments would exceed the number of new loans for the first time since at least 1965. “It is hard to imagine a more challenging environment in which to be making market forecasts,” the CML said, adding that it expects rising unemployment to lead to a surge of homeowners falling behind on payments and a rise in repossessions.
By the end of 2009, the CML expects mortgages in serious arrears to more than double to 500,000 or 4.41% of all home loans. It also expects the number of mortgages more than three months in arrears to total 210,000 or 1.8% of all mortgages by the end of this year, against 129,800 mortgages – 1.22% – at the end of 2007.
Lenders will show more forebearance to those who fall behind in payments, owing to a new government code and the Homeowner Mortgage Support Scheme. This means that although the number of late payments will rise, the foreclosure figures could be lower than would be expected with so many troubled borrowers.
Financial Times, The Times, The Guardian