» Click here for the original article

The financial industry has spelled out a grim 2008 for homeowners this week with predictions of house price cuts and repossession figures rising.
This week, the Bank of England released its latest inflation report, with Governor Mervyn King admitting house prices could well be on the turn.
He says: “It's conceivable there might be falls in house prices.”

Also, the UK’s top mortgage lending body has revealed UK home repossessions are set to rise in 2008.

The Council of Mortgage Lenders revealed there were 27,100 repossessions in the UK during 2007. Although this is less than 0.5% of all mortgages, the council has predicted this figure will rise in 2008.

Michael Coogan, director general of the CML, says: “There are likely to be more repossessions in 2008 as a result of wider issues in the economy and the mortgage funding markets.”

King adds: “Looking several years ahead, there's no reason to expect house prices to be markedly above where they are now. Simply, none of us know what will happen to house prices.”
Vincent Cable, shadow Chancellor for the Liberal Democrats, paints a very grim picture when looking at the repossession figures. He says: “This was the highest number of home repossessions this century.”

Cable adds: “What is of particular concern is the rise in the number of repossession orders, which indicates we could now be at the brink of another crash in the housing market if they are all followed through.”

The CML has admitted it remains difficult to forecast the likely level of arrears and repossessions in 2008 as conflicting factors are at work. But they do stress that funding pressures remain, and are having a specific impact on the capacity of the bad credit sector to meet demand, which will affect arrears and repossessions.

Some say there is no need for panic. Peter Bolton King, Chief Executive at the National Association of Estate Agents, says there is a long way to go before repossession figures reach the numbers seen in the early nineties.

He says: “It is vital that people looking at the wider market do not lose their sense of perspective, however. The 2007 repossession figures are still massively down on those seen in the early nineties, when nearly 80,000 were recorded in one year compared with 27,100 last year. The figures are in fact slightly lower than those of 1999 so this is by no means the worst the market has experienced.”

At 0.23%, the repossession rate was less than half the rate experienced throughout the first half of the 1990s. And at 13,500 the number of repossessions in the second half of 2007 was almost identical to the number in the first half of the year, which was at 13,600.

Mortgage brokers agree - Richard Farr, Director of the Association of Mortgage Intermediaries, says good advice can quell any fears.

He says: “It is likely to be a difficult year for consumers in 2008 and good advice will be more important than ever. Advisers can play an important role in helping consumers manage their debts. There are lots of ways for consumers to get out of difficulty and it is important to for them to stay in close contact with their lender and seek advice at the earliest opportunity.”

If you want to keep up with whats happening in the property market visit the Adverse Mortgage Blog at The Adverse Mortgage Centre