CEBR forecasts sharp rise in repossessions
The Centre for Economics and Business Research (CEBR) is predicting a sharp rise in the number of repossessions this year.
The economic forecaster is expecting the figure to increase by 23%, to 33,400.
CEBR has based its prediction on the rising cost of mortgages, tighter lending criteria that will leave some homeowners struggling to remortgage, and higher fuel and food prices.
It has also taken into account the fact that the burdens listed above are borne by a population with record levels of personal unsecured debts.
Even if the problems on the money markets mitigate, CEBR believes mortgages will remain in short supply this year, and that interest rates will remain above the Bank of England’s base rate.
According to Nur Ata, a senior economist at the CEBR, homeowners will continue to spend more on their mortgage costs and a rise in the number of repossessions is inevitable.
In addition, the consultancy is predicting that house prices will fall by 10% in the next two years and that the number of transactions will decline by 25%.
However, comparisons with the housing market crash of the early 1990s (when the repossessions were running at an annual 75,000) should be made with caution.
The 1990′s housing slump was largely the result of a failing economy and CEBR does not expect a similar scenario today. It is forecasting that unemployment will remain below 3.5% in the months ahead.