The first three months of 2011 saw a 15% increase in home repossessions, according to the Council of Mortgage Lenders (CML). That equates to 9,100 homes being repossessed in the first quarter of this year, although the number of householders behind on their mortgage payments has fallen slightly since the end of 2010.
With the Bank of England’s forecast for growth for the coming year downgraded, and inflation set to hit 5% before the end of the year, the outlook for homeowners in the short-to-medium term is not good. Indeed, the Governor of the Bank of England, Mervyn King, has identified the problems facing householders explicitly, stating, “Household spending may have further to adjust to the significant squeeze in real incomes.”
The struggling economy has prompted the CML to predict that a total of 40,000 people will lose their homes this year, up from 36,300 last year and a clear indication that the economy is still some way short of a recovery.
Michael Coogan, CML director general, said that in many cases mortgage lenders were giving householders the chance to get back level with mortgage payments rather than rushing into repossessions.
Mr Coogan did however acknowledge the challenges facing many householders, saying, “Looking ahead, the financial position of many households is likely to be stretched for some while, and some will inevitably find themselves in difficulty.”