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Mortgage Possession Stats Show We’re Back to 1991

Mortgage lenders issued 186,649 mortgage possession claims in 1991. The courts subsequently made 142,905 possession orders and 75,540 homes were actually repossessed. This was at the height of the previous recession.

The UK Ministry of Justice today released figures for the second quarter of 2008 and made reference to 2007’s figures.

137,591 mortgage possession claims were issued in 2007 with 95,433 possession orders being made. That year, only 26,200 homes were actually repossessed. The reduced number of “evictions” is probably in part due to 1996 case law (Chelteham & Gloucester - v - Norgan CA) defining more realistic timescales over which Defendants could repay arrears by installment.  Improvement is probably also due to increased money advice and possession duty desks at more courts becoming more available since around 2000.

However, the 2007 figures indicate a climb in statistics. This should cause concern as it was only at the start of the last quarter in 2007 that the credit crunch was identified and started to bite.

Figures for the second quarter of 2008 show a 17% increase on mortgage possession claims made over the same period last year with the actual number being almost identical to the first quarter of 2008 at 39,078. Actual possession orders for the second quarter of 2008 were 28,658 and this is 24% higher than the same period in 2007 and up 4% on the first quarter of 2008. Only about half of the mortgage possession orders were suspended orders and there are no figures yet for actual repossessions (or “evictions”).

On the “claims issued” statistic alone, figures for the 2008 half-way point almost match those of 1991. Orders made by the courts look like they too will at least equal 1991.

These statistics therefore indicate that today is a mirror of 1991 in far too many ways.

At 4.4%, the UK inflation figure for July (released today) is significantly more than the government's 2% target. Pundits today said they believe inflation may peak at around 7% towards the end of the year.

Meanwhile, BP has closed its oil pipelines in troubled Georgia. This will undoubtedly increase the price per barrel.

No let up in the worsening gloom.

Many thanks to British Gas for sending me a box of four energy-efficient light bulbs today.

Little comment from this poop-deck on the water companies' various above-inflation-projected-price-increases covering the five years following 2010. Let's pray OfWat applies common sense and that the water companies' figures are just negotiation starting points for the regulator to beat down. Anyone else feel that being screwed by utilities companies is now a normalised occurrence?

The Financial Services Authority - a regulatory body for some of the UK lending industry - today says banks should prepare and plan on the "assumption" that economic conditions will deteriorate to levels experienced at the start of the 1990s.

This is one whole year after the credit crunch started then accelerated quickly. During those 12 months - despite cataclysmic events at a number of financial institutions - all the commentators and experts said, without hesitation, that it would "not be as bad as the early '90s" and that "conditions are different this time round."

My April 5th blog entry suggests that economic forecasters are little more than neo-witch doctors. Either this is a true assessment or we are being drip-fed bad news that is actually being staged-managed with a degree of consent from within the financial community.

The Council of Mortgage Lenders today predicts 45,000 home repossessions for UK owner-occupiers this year. The CML only counts first mortgages and says 18,900 homes were repossessed in just the first six months of 2008. The CML does not count second, secured home-loans and the charity Shelter says the true number of home-owner repossessions is more likely to reach 70,000.

Despite Financial Services Authority guidelines introduced in 2006 to deter mortgage lenders from seeking possession through the courts, many lenders systematically flout their responsibilities at the earliest opportunity without considering other options potentially open to borrowers in trouble.

Judges in possession hearings are generally sympathetic to defendants whose lenders have breached FSA guidelines but they have no jurisdiction to take these misdemeanors into account. I have represented many such defendants in court fairly recently.

Given the steady increase in mortgage and secured loan repayment defaults ...

I heard this morning that EDF - the French fuel supplier - has price increases capped at 5% in its home market. It seems last month's 17% electricity and 22% gas price hikes mean we are subsidising the French consumer almost directly.

Reports in today that the FTSE 100 companies experienced a new deficit of £41billion in their pension schemes. This is blamed on the credit crunch. Last year, the pension funds held a £12billion surplus.

This week a petrol station worker was jailed for two years and nine months for robbing 500 customers of £175,000. He used a fake card reader to siphon off funds from their credit and debit cards.

Anyone worried about such practices and wanting to protect themselves might find my  article on identity theft interesting. It can be found at http://www.socyberty.com/Crime/Identity-Theft.164875

BBC News reports crude oil dropping below £120 a barrel - for the first time since May - as Tropical Storm Edouard now seems unlikely to affect offshore drilling sites in the Gulf of Mexico.

So, however sophisticated we think we are, we clearly remain at the mercy of the elements.

Will economists concede that they might as well cast chickens' entrails on the ground in order to forecast the future?

Isn't that the truth?

Reminiscent of the 1990s, the Land Registry reports house sales dropped 80% in June compared with the same month last year. 105,000 sales in June 2007 and 17,681 for June 2008 were recorded.

The only viable option appears to be encouraging buy-to-let purchasing and for estate agents to expand into letting services for the next generation of private landlords that must surely spring up.

Increasing gas prices prompted much recent reporting in the media that nuclear power has to be the way forward.

Quite apart from the questionable wisdom of putting yet another sector of our energy supply into foreign hands - and I am in fact a francophile - why did British Energy refuse the bid from French company EDF? The reason provided was because the share price was not high enough to reflect the profit that the majority of British Energy shareholders perceive can be made from supplying power in the UK.

So the nuclear option will not be a cheap one. Any debate or claim that it will be is surely now redundant; utterly pointless.

4,000 fixed-rate mortgages will come to an end today according to Credit Action statistical research. The research also says the Council of Mortgage Lenders expects mortgage repossessions in the county courts to increase from a current rate of 79 per day to 123.

Expect lots of feature stories on the news and in the press.

In case you just possibly didn't know, British Gas is putting up its fuel prices "with immediate effect." 9% increase for electricity and their 35% hike for gas is, according to Energywatch, "the biggest single increase in the price of a utility bill to date." All of this on top of EDF putting up prices and other "suppliers" making ready to follow suit.

How far do they really think they can push this? How much can we take before we have our people enduring winters in Novosibirsk fashion?

Indeed, the "fashion" in my home this winter may well be fingerless gloves and multiple jumpers - possibly from a charity shop.

This really cannot go on. Apologies for the language but we are being screwed mercilessly.

News is that new mortgage approvals slumped to their lowest level since records began 15 years ago. June (bless her) saw the figure slump by 68.4% according to the Bank of England.

It seems the UK government is putting together a rescue package for mortgage lenders. This will involve the tax-payer agreeing to underwrite the mortgage securities market - which, I think, means any bad borrowing or lending decisions by mortgage lenders and we then pick up the tab (again but in yet another different way!). However, the government insists there will be checks and measures ...so ...

Fingers of blame for the mortgage crisis regularly point to the credit industry for its binge of unsustainable lending and at the government for not regulating the matter properly.

However, this is surely an alarmingly lucid example of our own individual and collective lack of control. Impatience when applying for credit, greed when it comes to inflated property prices (and forgetting we have to pay proportionately more for the next house too) ... When I say "lack of control" I really mean "helplessness."

What useful remedy to suggest other than individuals and governments taking more responsibility over the corporations? However, in an increasingly global economy .....

The following couple of links are short articles that may be of interest ...

http://www.gomestic.com/Personal-Finance/Riding-Out-the-Credit-Crunch.161289

http://www.gomestic.com/Homeowners/Home-Sellers-Ripped-Off.172871

There's a lot in the news just now about beleaguered mortgage lenders offering reductions of thousands of pounds and cancellation of early repayment penalty charges to borrowers, even if it means making a "loss" on the loans.

This may seem slightly philanthropic or desperate depending on your point of view.

Those borrowers who can take advantage of such offers - checking first that they can find someone else to offer a new mortgage after independent financial advice - would probably be advised to do so.

However, the mortgage and secured lending industry really must be worried. It would usually take possession action in county court against defaulters but obviously sees repossession as pointless if the properties cannot realistically be sold (other than, presumably, to the few who are cash-rich and do not need to borrow).

Traditionally, when creditors decide that a loan really is unrecoverable, they sell it for 15% value (or even much less) to armpit companies who then use strong-arm tactics against the debtors. Creditors routinely build in a contingency for such losses when forecasting sales, setting charge rates, etc,.

There are obviously too many loans that now fall into the "unrecoverable" category and so lenders are offering borrowers discounted opportunities to repay the loans.

Lenders are not being philanthropic. They are desperately trying to cut their projected losses.

Financial website Fool.co.uk reports today that Centrica will raise home energy costs after the end of this month. An increase of 15% to 20% is expected by September with a further 20% rise at the New Year. Energy price inflation of 50% is forecast by February 2009.

Centrica posted £2.1bn half-yearly profits earlier this year and increased dividends to shareholders by 17%.

Centrica blames the "rising cost" of oil. One wonders if they will modify their planned rises after news this week that fuel prices at petrol stations are decreasing as the price of oil per barrel fell considerably ...

Malcolm Wicks MP, UK Energy Minister, today spoke out against the use of prepayment meters for domestic energy supplies.

Using a prepayment meter can be up to 70% more expensive than other methods of payment, such as by direct debit from bank accounts.

It is often the poorest who have to resort to prepayment meters. They usually do not have sufficient income to be able to service direct debits (assuming they have a bank account in the first place).

Prepayment meters are perhaps useful in that they are a last resort before people in severe fuel arrears have their supplies disconnected. However, any inability to pay for fuel through these meters essentially becomes self-disconnection.

The forecast 70% increase in energy bills will undoubtedly mean lots of cold, candlelit homes throughout the UK.

'Energy crunch bites as fuel bills rise by a third' is the headline of a Times newspaper article today that includes energy company Centrica's warning that annual domestic gas bills may increase by an average of £600 (66%).

Is this the same Centrica that posted profits of £2.1 billion and increased shareholder dividends by 17% earlier this year?

What about the energy industry's agreement with the Government earlier this year to discount bills for the elderly and vulnerable - coincidentally announced around the time of a previous industry prediction that bills would rise by 40% this Winter?