News

2009 repossessions down on 2008 but market conditions remain difficult

Released on 11 February 2010

Figures released today by the Finance & Leasing Association (FLA) show that second-charge mortgage lenders took possession of almost ten percent fewer properties in 2009 than they repossessed in 2008.   

In the final quarter of 2009, second-charge mortgage lenders repossessed 233 properties, which was 37 percent lower than in the same period a year earlier. The Q4 figure means that second-charge mortgage lenders repossessed 1,458 properties in 2009, 9.2 percent down on 2008, and below than the FLA’s original forecast of 1,522. 

The fragility of the UK’s emergence from recession, and the continued high level of unemployment mean many borrowers continue to face difficulties in meeting their financial commitments. This could mean a rise in the number of repossessions in 2010.  

This news comes at a time when the Government is considering transferring regulatory responsibility for second-charge mortgages from the Office of Fair Trading to the Financial Services Authority.  

Fiona Hoyle, Head of Consumer Finance at the FLA, said:  

“Second charge lenders are doing all they can to help customers in financial difficulties and this is reflected in the low number of repossessions.  But many people are still struggling with repayments and this looks set to continue during 2010.  Repossession will remain a last resort. 

“The small number of properties repossessed shows that the current regulation is working well – lenders are able to lend responsibly and keep repossessions low. We still remain to be convinced that Government proposals for transferring regulatory responsibility from the Office of Fair Trading to the Financial Services Authority are needed.” 

Table 1:  The number of actual properties taken into possession by FLA second mortgage providers¹

1.     Possession proceedings arising from FLA members’ second mortgage books, which have led to actual possession by the second mortgage provider. 

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Note to editors:

• FLA members provide around 85% of all second-charge mortgages.
• The FLA made a forecast of 1,522 repossessions for 2009.
• In November 2008, the FLA published Good Practice Guidelines for Second Charge Mortgages. The guidelines gave a commitment to help customers in difficulty by setting out the help that is available and committing lenders to consider each case on an individual basis, taking into account customers’ circumstances. The guidelines make clear that every effort will be made to come to an arrangement with customers in difficulty and that repossession is a last resort.
• The FLA is the leading trade association for the asset, consumer and motor finance sectors in the UK, covering secured and unsecured loan as well as credit and store card providers. FLA members provide over 85% of all second charge mortgages. In 2009 FLA members provided £52 billion to the consumer finance sector, representing almost 30% of all unsecured lending in the UK in 2009. 
• FLA members comply with the Pre Action Protocol introduced in 2008, as well as the additional requirements introduced by the OFT for second-charge lenders in possession cases in 2009. 

 For further media information, please contact:  

Russell Hamblin-Boone, FLA

T: 020 7420 9656 M: 07810 374110 E: russell.hamblin-boone@fla.org.uk  

Helen Saxon, FLA

T: 020 7420 9664 M: 07918 766993 E: helen.saxon@fla.org.uk

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