Repossessions forecast for 2013 remains low despite an increase during Q1

New figures released today by the Finance & Leasing Association (FLA) show an increase in repossessions by second charge mortgage providers during Q1 2013, but the forecast for 2013 remains below the levels recorded in 2010 and 2011.

The second charge mortgage market is relatively small and the 49.7% increase shown in Q1 2013 is measured against an exceptionally low level of repossessions in the same quarter the previous year. The 750 repossessions forecast for 2013 as a whole – while slightly up on 2012 – remains below the 827 reported in 2010 and 864 in 2011.

Commenting on the figures, Geraldine Kilkelly, Chief Economist at the FLA, said: “The number of repossessions in Q1 remained low at 226, representing less than 0.08% of the total number of outstanding second charge mortgage contracts.”

Notes to Editors

1. There are breaks in the time series in from Q1 2012 onwards because of changes to second-charge mortgage providers in FLA membership. On a same sample basis, the number of repossessions grew in Q1 2013 by 63.8% compared with the same quarter in 2012.
2. In 2012 FLA members provided approximately £76 billion of new finance to UK businesses and households. Almost £55 billion of this was in the form of consumer credit, 30% of all unsecured lending in the UK.
3. 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.
4. 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.