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No room for complacency in mortgage market

Monday 11th February 2008

Figures from the Council of Mortgage Lenders (CML) show a total of 27,100 properties were repossessed over the course of 2007.

The number was split fairly evenly between the two halves of the year, with 13,600 in the first six months and a further 13,500 from July onwards.

While this represents about ten per cent fewer repossessions than were anticipated, it is still more than three times the figures recorded in 2003 and 2004.

In those years, 8,500 and 8,200 homes respectively were taken into possession by lenders - accounting for 0.07 per cent of the overall mortgaged housing stock each year.

But the 2007 total represents 0.23 per cent of the 11.8 million homes covered by mortgages in the 12-month period.

The CML has now written to lenders urging them to look favourably on clients who lose their income, to bring them in line with the same protection extended to tenants in rented property.

Director general Michael Coogan adds that 2008 is likely to see a rise in repossessions as widespread disruption in the financial markets takes hold.

"The good news is that the impact of payment shock is likely to be more muted than previously expected," the CML states.

"But there is no room for complacency," the organisation adds - noting that any further reductions in the base rate could be welcome news for homeowners.

However, following the Bank of Englands decision to cut the base rate last week, Mr Coogan advised that lenders use "more complex" rate-setting procedures than some customers may realise.

As a result, he warned that the full 0.25 per cent rate reduction may not automatically be passed on in standard variable rate or discount rate mortgages.©

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