Home Repossessions 'To Rise 22% In 2012'

The number of home repossessions will rise sharply next year while lending slows down, Britain's lenders have warned.

The Council of Mortgage Lenders (CML) predicts 45,000 homes will be reclaimed by banks in 2012, compared to an estimate of 37,000 this year.

It said the 22% increase would still keep repossessions below the number in 2009, and "far lower" than during the economic downturn of the 1990s.

But, after a two-year drop, the number of mortgages with 2.5% or more of the balance in arrears is also predicted to rise to a total of 180,000.

The CML explained that "the weak state of the wider economy and household finances creates a challenging and highly uncertain backdrop for the housing and mortgage markets".

The industry body expects lending to fall in 2012 to £133bn, from £136bn this year.

Property transactions will also remain subdued, falling from an estimated 852,000 transactions this year to around 825,000 in 2012.

Figures for 2011 offered some reassurance with mortgage advances rising in November (Stuttgart: A0Z24E - news) to £13bn - 5% higher than in October and 13% above the same period last year.

CML chief economist Bob Pannell said stresses in the markets could heal if eurozone leaders find a "comprehensive and sustainable" route through the current crisis.

"This in turn could have a major benefit on UK growth prospects, and boost household confidence and appetite to borrow," he added.