The U.K.’s Council of Mortgage Lenders (CML) released some updated forecasts on the U.K. economy for 2009.
It has revised its repossession forecast from 75,000 to 65,000 based on: the benefit for borrowers of lower interest rates,significant levels of forbearance being shown by lenders and government interventions to support struggling homeowners.
Housing transactions forecast remains the same at 700,000 transactions and gross lending forecast also remained the same at £145 billion ($239.8 billion).
The British Bankers Association (BBA) has also reported that 31.2K mortgages were approved in May, a slight increase from the 29.0K mortgages approved in April.
These figures seem to highlight that while performance has deteriorated significantly over the past 18 months, there are some signs of moderation and stabilisation, which also prompted the CML to revise its forecast for total repossessions in 2009, Barclays Capital analysts said. This is similar to our view, where we also believe that as repossessions increase, there will be far more political pressure to help homeowners; and as we have seen from another recent statement from the FSA, the regulators will crack down on lenders that are not seemingly helping borrowers in financial difficulties. This will affect the performance in securitized transactions and may lead to better performance but potential extension risk to the bonds.
