18/12/2008

Mortgage Arrears 'Could Reach 500,000', CML Warns

The number of households more than three months behind in their mortgage repayments could reach 500,000, according to stark figures released today.

The Council of Mortgage Lenders (CML) have warned that despite action taken by the Government and housing industry, 2009 is expected to be a "very tough year" for the UK mortgage market.

The CML added that the looming recession, which would drive up unemployment, could lead to 75,000 repossessions among borrowers.

The latest figures showed gross lending has reached an estimated £14.6 billion in November, a 22% fall from October and a 51% drop from the same month last year.

"Market disruption and continued deterioration of confidence in the economy" was described by the group as the major cause.

CML director general Michael Coogan said: "In looking ahead to the coming year, the housing market will remain extremely subdued and net mortgage lending is likely to turn negative. Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers.

"Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful, but more will be needed.”

He added: "2009 will be a challenging year, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates."

(JM)

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