Although the actual number of mortgage possessions rose again in the first half of 2007, accounts in arrears by 12 months or more actually fell, with those less than 12 months in arrears only rising slightly – cementing the fact that this is still ‘exceedingly low’ compared to historic figures.
The fundamental strength of the economy has been cited by IMLA as the reason we will not see a repeat of the 1991 recession. Moreover the association assert that it is certainly not a sign that the UK mortgage industry is going to face the same problems as the current US market.
Peter Williams, IMLA’s executive director said: “There is some deterioration in the figures but they are still exceedingly low by historic standards. If we compare the number of mortgages 12 months or more in arrears with the same period of 1993, we find it is almost 11 times lower. Arrears have been fairly steady for the past few years and this tick-up takes arrears up to 2002 levels and possessions up to H2 1999 levels - a world away from the problems of the early 1990s. While any increase is unwelcome by both lenders and borrowers we do need to keep this in perspective.
“We also need to recognise that the market is very different now compared to the nineties when for example, buy to let, self certification and sub-prime as specific niches did not really exist. The growth of these sub markets reflects changes in the economy and employment, and have been central to the continued growth of home ownership and the mortgage market in the UK. All lenders and especially those in the sub-prime markets are very aware of the need to manage arrears as fairly and effectively as they can and they will be working closely with the borrowers in difficulties. ”
