Homes repossessed by lenders in the UK dropped in the last three months of 2010 as record low interest rates helped homeowners stay current with their mortgages.
Home repossessions were down by 26 percent in the fourth quarter, compared to the same period last year. However, the drop was 11 percent on quarter-on-quarter basis, said the Council of Mortgage Lenders. This is the fifth straight quarterly decline in a row.
The industry body has reiterated their full year forecast of 40,000 repossessions for 2011, up from 36,300 recorded last year. The number of homeowners losing property can be higher if the Bank of England chooses to raise rates later this year, it warned.
“As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available”, said CML director general Michael Coogan.
Keeping in view the recent surge in inflation, the market has factored in at least two quarter-point rate hikes by the end of the year.
In the October to December period, the courts ordered 14,847 repossessions in Britain – after adjusting for seasonal variations, the Ministry of Justice said in a separate statement.
The numbers are higher by 3 percentage points over the third quarter, but lower by 8 percentage points over same period in 2009.
Many people may witness long periods of joblessness if the economy fails to kick-start, aggravating the situation, said analysts at IHS Global Insight. “Likely relatively muted growth in 2011 will mean that many people who have lost their jobs will be unemployed for a long time and this will weigh heavily on their finances”, they said in a recent note.
In the final quarter, company failure rates also went down as courts in England and Wales issued 2,510 wind-up petitions during the period, a drop of 10 percent over previous quarter and down by 6 percent over Q4, 2009.