This factor, taken together with the significant levels of forbearance being shown by lenders and the Government’s interventions to improve support for some struggling home-owners has resulted in the CML reducing its forecast for repossessions for this year from 75,000 to 65,000.
The CML’s forecasts for housing transactions and gross lending remain unchanged, at 700,000 transactions and £145billion 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 £5billion, compared with the £25billion contraction previously anticipated.
The CML said: "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."
However, the CML’s positive view was disputed by Nick Hopkinson, Director of Property Portfolio Rescue (PPR).
He said: "The CML’s decision to revise its repossession forecast seems a little premature in the light of rising unemployment and the ongoing fragile nature of our economy.
"It is evident from the data released by the FSA that arrears are shooting through the roof and while these figures may not translate immediately into repossessions, any measures being taken by lenders to assist those borrowers struggling with mortgage repayments will only delay the inevitable. Those who can’t make their mortgage repayments now will only find themselves in a worse situation next year when interest rates go up and they have even less equity in their homes.
"We are continuing to receive a growing number of enquires from sellers, desperate to sell their property in an attempt to avoid imminent repossession and I would expect to see this continue for the remainder of 2009 and into 2010 as reduced incomes leave many homeowners with little choice.
"In line with our latest Distress Index, we would expect to see repossessions continue to rise for the remainder of 2009, exceeding 70,000 by the end of 2009."
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