Low rates result in cut in repossession forecasts

Earlier this month the Bank of England announced that the base interest rate was being kept on hold at its all time low of just 0.5 percent, which is the lowest it has even been in the history of the Bank of England, which spans over three centuries. This is the eighteenth month in a row that the base rate has been held at this rate, having been slashed in 2008 by the former Labour government.

Over the past couple of years repossession levels in the UK have been rising, and this is an issue that has caused grave concern since the onset of the global credit crisis and the recession, which left many homeowners unable to cope with their mortgage repayments. Forecasts for up and coming repossessions had been quite high given that the recession has not been over for long, but low interest rates may have changed the mind of many industry groups and experts.

According to figures the number of people losing their homes through repossession has fallen over the past quarter, and it is thought that this is at least partly down to the fact that the base interest rate is so low. With this in mind mortgage lenders have now cut their forecasts for repossession numbers. During the three months to the end of June there were 9400 repossessions, and this marked a drop of 400 compared to the previous quarter.

Previously the Council of Mortgage Lenders had predicted that over the course of this year there would be a total of 53,000 repossessions, but the mortgage group has now cut this prediction to just 39,000 repossessions for the year.

Michael Coogan from the CML said: ‘Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession.’