It was reported earlier this week that the Council of Mortgage Lenders (CML) have recently reviewed their figures downwards regarding the number of expected repossessions this year from borrowers falling into arrears and defaulting on their homeowner loans. However, the housing charity Shelter disagrees with the CML and have predicted that there is likely to be a “second wave” of repossessions through loan arrears within the next two years.

Although the CML have predicted that there will now be around 65,000 repossessions over the year, rather than 75,000, the figures from the Financial Services Authority (FSA) show an increase of 62 per cent in the total number of repossessions and also a 33 per cent increase in the level of loan arrears cases. Shelter have warned that a combination of rising unemployment, an increase in interest rates pushing up the cost of loans and the government mortgage support scheme finishing, could create the situation where we see a huge increase in the number of loan repossessions, even based on what we have seen during the current economic slowdown.

Sam Younger of Shelter commented on the problem, he said “With arrears escalating at an alarming rate, unemployment at its worst for 12 years and interest rates very likely to rise next year, we believe a second, more devastating wave of repossessions could occur within the next two years.

The government and lenders are working hard to help homeowners who are struggling now. But they must not be complacent and we fear that they are not planning adequately for the future. We are pleased that the new housing minister has today increased the funding for legal advice at courts. But the government must also find ways of expanding other advice services for vulnerable households and ensure repossession prevention schemes help more people.”