Concerns are increasing that mortgage lending institutions will soon start taking a tougher stance on mortgage defaulters leading to an increase in the number of properties repossessed.
Data recently released by the CML showed a 7% decrease in repossessions during the first six months of this year, compared to the comparable period last year.
In the second quarter of 2011, 9,000 homes were repossessed, 100 less than in Q1. In the first six months of 2010, there were a total of 19,500 repossessions.
However, the MD of xit2, Mark Blackwell, said contractor mortgage arrears and resultant repossessions are like an iceberg waiting to strike the market and there is trouble brewing below the surface.
Lenders are reaching breaking point and can no longer continue forbearance when a borrower has no hope of paying off mortgage arrears. He went on to say that there has been a considerable increase in repossessions from one mortgage lender after it changed its rules on forbearance.
The CML has estimated there will be 45,000 repossessions in 2012, a figure Blackwell says is conservative.
Chris Garner, a director of Obligo.co.uk said repossession rates have been kept artificially low as lenders have extended tolerance to late payers. However, this situation cannot continue indefinitely and once lenders alter their approach to forbearance, thousands of households could find the rug pulled out from under them.
CML data also showed that 78,500 people were in arrears of between 1.5% and 2.5% of their outstanding mortgage balance in Q2 this year, an increase of 700 on Q1. But there was a decrease of 2,200 in the number of people with arrears in excess of 2.5%.
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