Risk of UK Repossessions was Overblown

 Hardly as many houses will be repossessed in the year 2009 by lenders as previously thought, according to The Council of Mortgage Lenders.

The group had predicted that there will be 75,000 repossessions in UK this year. However it now believes that total repossessions were overestimated by 10,000 and will be only 65,000.

And this number is still a marked rise from the 40,000 repossesions in 2008.

Why lesser repossessions?
Although less number of people will be losing their homes, it is no consolation to those who willdue to financial distress.

The reason is attributed to the government scheme offering last-gasp free advice in courts about repossessions in England. This scheme, which is being extended to all courts in England via atleast one advisor in each court, is primarily aimed at people who are often unaware of the extent of their housing difficulties or who believe nothing can be done to keep them in their homes.

Another reason is low interest rates. As the Bank of England's base rate is currently 0.5%, the standard variable rate most lenders are charging is about 2.5 to 3% - which is more managable by many families than the higher rates.

Green Shoots?
However CML warns that this does not automatically means that the recovery in housing market is about to begin. As the lending is still tight, it says that the hosuing activity will remain subdued for some time yet.

"Nevertheless, we expect that further job losses and disruption to incomes will cause the number falling behind with their mortgage payments to rise over the course of 2009 - but at a slower pace than we had previously anticipated," the group said.