Home repossessions tumble

City A.M. Reporter
THE number of homes repossessed by lenders in Britain fell to a two and a half year low in the third quarter, data showed yesterday, but courts issued more orders to reclaim homes, suggesting there may be a rise ahead.

Figures from the Council of Mortgage Lenders showed that 8,900 homes were repossessed in the third quarter, down from 9,400 in the second quarter and the lowest since the first quarter of 2008.

Separate data from the Ministry of Justice showed that courts in England and Wales issued five per cent more repossession orders compared with the previous quarter at 14,138 – the first quarterly rise in a year.

Court orders for repossessions do not always result in a person losing their home, and almost half of the orders were suspended, giving homeowners more time to repay their debts, but the third-quarter may signal a reversal of the recent downtrend.

Repossessions have been falling since early 2009 when they peaked at 13,000, but analysts reckon they could rise again once government spending cuts – expected to cost half a million public sector jobs over the next five years -- kick in.

“The substantial fiscal squeeze will increasingly hit public sector jobs and consumers’ pockets, while households already face high unemployment, muted earnings growth and elevated debt levels,” said Howard Archer, economist at IHS Global Insight.

“There will also be a lagged impact from the recession as relatively gradual recovery overall will mean that many people who have lost their jobs will be unemployed for a long time and this will weigh heavily on their finances.”

The CML said home repossessions in the first nine months of this year totalled 28,400, and was trending below its forecast for 2010 as a whole.