ROOF Blog

FSA figures show 54,055 people had their properties repossessed during 2009, up from 46,945 in 2008. But there was a fall in both the number of repossessions and the number of people who were unable to keep up with their mortgage during the final quarter of the year. Around 11,800 homes were repossessed during the final three months of 2009, 15% fewer than during the previous quarter. The figures are broadly in line with ones reported by the Council of Mortgage Lenders (CML) for 2009, which showed that 46,000 people had their home repossessed during the year, the highest level since 1995. The FSA’s figures are higher than the CML ones because they include second-charge mortgages and loans advanced by lenders who are not CML members.

Around 300,000 people who had hoped to pay off their mortgage this year face shortfalls. They are all victims of missselling of 25 year with-profits endowment policies. Almost three million more people will suffer a similar fate in the next few years, according to the Association of British Insurers. At the peak of the 80s housing boom, homebuyers were encouraged to take interest-only mortgages and rely on investment returns from an endowment to repay the loan at the end of the term, usually 25 years. In the 90s, £50 a month policies regularly turned a £15,000 investment into a £100,000 return.  Today, they commonly pay out less than £30,000 for the same 25-year investment.

The end of stamp duty relief at the start of the year has helped cause a substantial dip in mortgage lending during January, with just £8.02 billion lent during the month, the lowest level since March 2001. This compares with an average monthly amount of about £18 billion during 2007. The data, released by the British Bankers’ association, are the latest figures to suggest the economy will endure a slow recovery, after signs of optimism at the end of last year. A leading member of the Bank of England’s Monetary Policy Committee warned today that the housing market could be ‘weak’ during 2010.

With a growing number of Americans facing negative equity and becoming ever more pessimistic about the prospects of house prices recovering to make up that difference, they are surrendering to foreclosure even though they can still meet the repayments, according to reports. The trend is clear in recent rates of non-payment, or delinquency, on mortgages. In January, delinquencies on outstanding ‘jumbo’ mortgages - big loans granted to people with good credit histories - rose to 9.6 per cent, according to Fitch Ratings. Many of these problem loans, which have gone unserviced for 60 days or more, were taken out after 2005. And nonpayment is increasing not just in hard-hit states such as California: in New York, Florida, Virginia and New Jersey they are all on the rise too.

Gross mortgage lending in January fell to the lowest level in 10 years as buyers were deterred by the end of the stamp duty holiday, figures showed this week – but experts have warned that lending could decline further as banks lose government funding support. According to the Council of Mortgage Lenders (CML), gross mortgages totalled just £9.1bn in January, down 32 per cent from the £13.4bn in December. This is the lowest monthly total since February 2000, when gross lending was £7.9bn. While a seasonal fall is usual between December and January, the CML said the drop was ‘larger than average’ due to higher purchase activity in December, as borrowers rushed to take advantage of the stamp duty holiday on properties valued less than £175,000.

John Healey has extended the government’s campaign to help struggling homeowners get a grip on their finances and avoid repossession. Over 330,000 households have had help and advice with their mortgages over the past year. But with the pressure on families likely to remain high throughout 2010, starting this week the government is working with CAB to run a string of local help events in 56 repossession ‘hotspots’, so that struggling homeowners can get impartial face-to-face help and advice to keep their home. New radio and local press advertising in all 56 areas will also promote the free telephone advice line and special website to help homeowners struggling with their mortgage payments.

Hundreds of thousands of homeowners could be in line to collect hefty refunds for unfair mortgage charges as lenders face being forced to hand back millions of pounds in fees imposed on customers who missed their monthly loan payments. One firm has been fined £2.8million and made to return £7.7million to borrowers when it was found to have acted unfairly. The crackdown by the Financial Services Authority is likely to lead to claims by hundreds of thousands of home owners who believe they have been harshly penalised.

Both the CML and the Bank of England agreed that mortgage lending edged up again in the last months of the year, against the usual seasonal downturn. The CML reported that gross mortgage lending reached an estimated £13.7bn in December, up 14 per cent on November. A rush of sales before the end of the stamp duty holiday and the prospective hike in VAT accounted for much of the improvement.

Tens of thousands of borrowers face a shock jump in mortgage payments after Skipton Building Society confirmed plans to raise its standard variable rate from 3.5 per cent to 4.95 per cent. The move, to take effect from 1 March, will raise mortgage repayments by up to 40 per cent for some borrowers, adding almost £200 a month to repayments on a £150,000 interest-only loan. Skipton, Britain’s fifth-largest building society, with 100,000 borrowers, previously had guaranteed that its variable rate would not rise while Bank of England base rate stayed at 0.5 per cent, but it has cited a clause in its loans’ small print allowing it to ignore the promise in ‘exceptional circumstances’. Skipton has blamed its decision on ‘unprecedented’ competition in the savings market from National Savings & Investments (NS&I), the Treasury-backed savings provider, and state- controlled banks. Experts say that other building societies are likely to follow suit and raise interest rates for homeowners on an SVR, the ‘revert’ rate that borrowers switch to when a mortgage deal ends.

Buy-to-let investors are back in favour with mortgage lenders for the first time in two years, raising renewed concerns that first-time buyers could once more be squeezed out of the market for one and two-bedroom properties by landlords. Brokers said that a number of lenders have started to focus on attracting landlords with more favourable interest rates, after a long period of freezing them out. Despite the credit-fuelled boom and subsequent collapse of the buy-to-let market, which left many city centre flats empty and landlords unable to complete purchases, the lenders that are now re-entering the market perceive their customers as less risky than first-time buyers.