News
2012 REGIONAL REPOSSESSION FORECAST: A RISE BEFORE A FALL
Date posted: Dec 15 '11
· Property repossessions are set to rise by around 7% during 2012 (1) before starting to fall back in 2013
· Northern Ireland will have the highest rate of repossessions at 1.08% during 2012, with the South West having the lowest rate of 0.25%
· The South East will have more properties repossessed than any other region (4,226) and the North East will have the lowest number of repossessed properties (1,635)
· Overall, HML predicts 37,709 properties will be repossessed during 2012 in the only forecast to break down repossessions by region.
Repossessions are set to rise by around 7% in 2012 according to the UK’s most accurate regional repossession forecast produced by HML from an analysis of more than 800,000 mortgage accounts. All UK regions will see modest increases, in both the rate and number of repossessions, although Northern Ireland will experience a repossession rate more than four times higher than the South West of England.
Damian Riley Director of Business Intelligence said: “The increase in property repossessions during 2012 will be the legacy of high levels of mortgage arrears in 2011 (there is still a stock of 27,300 loans (2) with arrears of more than 10% of their outstanding balance). Although interest rates continue at historically low levels and look set to remain that way during 2012, the worsening economic situation will inevitably put pressure on household incomes.
“Some lenders may also choose to apply forbearance only when it is deemed fully appropriate to do so and a tougher approach may cause repossession rates to rise further. However, there is no evidence that this has yet started to happen.
“Uncertainty over economic problems in the Eurozone and the knock-on effect they may have in the UK, make forecasting particularly difficult at the moment. However, HML believes that although we will see repossessions peak in 2012, they should, barring any unforeseen sovereign debt, interest rate or other shock, then start to fall back during 2013.”
HML manages around £43bn of mortgages on behalf of 50 leading financial institutions. It forecast in January this year that a total of 33,257 homes would be repossessed throughout 2011 and that would rise to between 35,000 and 40,000 during 2012.
The Council of Mortgage Lenders (CML) recently confirmed that during the first three quarters of 2011 a total of 27,500 properties were taken into possession and said total figures for 2011 would be below its original forecast for the year of 40,000.
Table 1: 2011 Regional Repossession Forecast
Region | Forecast % | Forecast No |
East of England | 0.35% | 3,111 |
East Midlands | 0.31% | 2,452 |
London | 0.42% | 4,661 |
North East | 0.38% | 1,635 |
North West | 0.31% | 3,663 |
Northern Ireland | 1.08% | 2,988 |
Scotland | 0.40% | 3,636 |
South East | 0.31% | 4,226 |
South West | 0.25% | 2,265 |
Wales | 0.38% | 1,820 |
West Midlands | 0.40% | 3,742 |
Yorkshire & Humber | 0.38% | 3,510 |
UK | 0.37% | 37,709 |
**ends**
Press Contacts:
Notes to editors
1) Latest figures from the CML indicate the 2011 year end figure for actual repossessions is estimated at between 35,000 and 35,500. The lower figure would indicate a rise of 7.7% in repossessions next year based on our forecast of 37,709, the higher figure would result in an increase of 6.2% based on our 2012 forecast.
2) Source: CML
How the forecast is compiled
1) HML Business Intelligence maintains a database of information about UK residential mortgages. It has a pool of detailed account level information from more than 800,000 mortgage accounts, which includes prime, BTL and non-confirming market sectors.
2) The repossession figures are calculated by combining forecasts of the future behaviour of individual mortgage accounts, with macroeconomic forecasts of the economy and its impact on the mortgage market.
3) Additional source information for the report has been derived from the Council of Mortgage Lenders (CML) actual repossession figures for 2011, the Financial Services Authority, actual repossession figures for 2011, the Office for National Statistic (ONS) Family Spending – A report on the 2008 living costs and food survey and a report on Social Trends: Housing, which provides a breakdown of dwelling stock by region and type of accommodation (2008).
About HML
1. HML is a leading specialist financial outsourcer with 23 years’ experience managing customer accounts for some of the world’s leading financial institutions.
2. It manages around £43bn worth of mortgage assets for around 50 clients
3. HML is the highest rated UK residential primary mortgage servicer by Standard & Poor’s.
4. HML is a wholly owned subsidiary of Skipton Building Society.
For more information please visit www.hml.co.uk
