Wednesday, 22 June 2011

Repos on the rise!

The number of repossessions in the first quarter of 2011 rose for the first time in a year, and were up 17% to 9,613.

Meanwhile, the mortgage drought continues.

The statistic on possessions is in the Financial Services Authority mortgage lending data covering the first three months of this year and published yesterday.

The data paints a picture of a housing market that remains stubbornly at a standstill, with new advances totalling £33bn, 10% lower than in the last quarter of last year although 3% up on the first quarter of 2010.

But house purchase mortgages accounted for just 54% – a reduced share – of new mortgages.

Only 2% of all new mortgages were given with a loan to value above 90%.

Borrowers with impaired credit histories struggled to get anywhere at all with lenders, receiving just 0.3% of all loans.

While possessions were up, the number of new arrears in the first quarter was down 8% on the last quarter of 2010. The total number of arrears cases stands at 337,000, 2% down on the last quarter of 2010 and 7% down on quarter one 2010.

David Brown, commercial director of LSL Property Services, the parent company of Your Move and Reeds Rains estate agency chains, said: “Transactions are currently running at less than 61% of the long-term average, which is an indication of just how quiet the housing market currently is.

“According to our research, the greatest fall in transactions has been for flats, which are the property type most frequently purchased by first-time buyers.

“They’re being hardest hit by the mortgage drought. Despite the number of mortgages currently offering repayment rates below 3%, lenders are still exercising caution when giving mortgages to those with limited deposits.

“The greatest fall in transactions appears to be in the South-East and London, where property prices have grown by 2.6% and 7.4% respectively in the last year, while northern England, where prices have fallen by 2.6%, is the only region to see growth in transactions.

“These transaction figures may be the first sign that the regional house price picture in the UK may be about to reverse as prices in the South-East are reaching a peak.”

Meanwhile, the National Association of Estate Agents issued an uncharacteristically gloomy report which referred to ‘stagnation’ in the housing market.

Wendy Evans-Scott, President of the NAEA, said: “Our members have likened the housing market to an obstacle course, with many falling at the first hurdle as the finance required to buy just isn’t available.

“The banks must find a balance between the loose lending of the boom and the rigidity of the current lending rules. House buyers need the Government to act in a sensible and proportionate way by encouraging the banks to offer adequate financial help to buyers.”

In 2006, there were 1.66m housing transactions. Last year, there were 886,000. This year, the Council of Mortgage Lenders has lowered its prediction to 840,000.

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