An update from the Council of Mortgage Lenders, whose members account for around 98% of residential property lending in the UK, says that it now expects a lower level of repossessions.
It had predicted that there would be 75,000 repossessions this year but it has now revised that figure down to 65,000. It also expects some 360,000 mortgages to be in arrears, that's 2.5%, by the end of the year.
The revised outlook is due to significant levels of forbearance being shown by lenders and the government's interventions to improve support for some struggling property owners.
The CML's forecasts for housing transactions and gross lending remains unchanged at 700,000 transactions and £145 billion of gross lending. However, the outlook for net lending appears less negative than previously forecast, and the CML now expects net lending to fall by only around £5 billion, compared with the £25 billion contraction previously anticipated.
'The raft of measures taken by the authorities have stabilised the economy and will sow the seeds for a recovery over time, including in the housing market. But the improvement is likely to be slow and drawn out, especially as the extensive fiscal, monetary and credit support measures are gradually unwound,' said a spokesman.
The CML forecast does not go beyond the end of the year although one leading economist has recently warned that repossessions could surge in 2011 due to rising unemployment. Ian Shepherdson told the Chartered Institute of Housing's Annual Conference that repossessions will reach between 100,000 and 120,000 per year by 2011. Repossession levels in 2008 stood at 40,000.
