Commentary on CML Data: 12,800 Homes Repossessed Q1 2009

The Council of Mortgage Lenders today revealed that 12,800 UK homes were repossessed in the first quarter of this year, compared to 10,400 in the last quarter of last year, and 8,500.

The CML now thinks that its forecast of 75,000 repossession for this year is looking pessimistic, despite the fact that repossessions are still rising. The CML says it will probably adjust its forecast in its next report on the UK housing market.

Despite technical issues this quarter affecting our ability to compare arrears and possession rates with earlier periods, it is clear that mortgage arrears continued to increase. So did repossessions, but not as much as our 75,000 forecast figure for the year would suggest. So our forecast now looks pessimistic and we expect to revise it over the next month or so," said CML director general Michael Coogan.

"Lenders are acutely conscious that behind the statistics are real people, many of whom are affected by the economic downturn and its impacts on unemployment, changes in circumstances and inability to refinance," he added.

Coogan also explained how the fact that the number of people falling into arrears groing far quicker than actual repossessions shows that the lenders are being "more forbearing" when it comes to repossessing homes.

Whether or not that will prove to be good for the housing market in the long run or not is yet to be seen. Some analysts believe repossessions are hanging over the UK housing market like a dark cloud.

It is their viewpoint that: there is sufficient help out there for people who are struggling to meet mortgage repayments, it is not the lenders' responsibility; better that we should get it over with as soon as possible.

It is certainly true that while the lenders are being forbearing, the true extent of toxic assets will not be revealed.

On the other hand, repossessing is what shows a home to be a toxic asset, by giving borrowers the chance to avoid foreclosure may end up improving the banks' balance sheet -- of course they probably won't test this out inevitable.