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Relief for families as key data lifts gloom on economy
Jonathan Prynn15 May 2009
Thousands fewer families than feared face losing their homes this year following the falls in mortgage rates.
Official forecasts of repossessions in 2009 are to be slashed from a “too pessimistic” 75,000 because home owners are “muddling through” even if they have lost their jobs.
The number of repossessions in the first quarter of the year was up 50 per cent on 2008 to 12,800, the to Council of Mortgage Lenders figures said today, but this was a much less dramatic surge than expected.
The Bank of England has slashed its base rate from five per cent to a record 0.5 per cent since October, cutting monthly mortgage bills by up to 90 per cent for borrowers on interestingly tracker loans.
Credit and debit card issuers said plastic spending in the first quarter was 5.4 per cent higher than 2008 at £94.2 billion.
In March shoppers spent £21.9 billion, the highest monthly figure since last September when the financial crisis exploded with the collapse of Lehman Brothers.
The latest sign of green shoots comes ahead of a key week of economic data, with commentators forecasting the most optimistic figures for months.
CBI figures on Wednesday are expected to show a rise in confidence among manufacturers, while retail sales figures on Friday should show relatively robust growth in April.
Consumer inflation is also expected to have fallen last month closer to its target level of two per cent.
There are even suggestions that the original estimate of a 1.9 per cent contraction in economic output in the first quarter could be revised to 1.8 per cent.
However, monthly public finance figures published on Thursday are expected to make grim reading, with the public sector borrowing requirement soaring from £1.9 billion to £10 billion.
But some business leaders are talking increasingly hopefully that the “shock” phase of the downturn could be over and that the foundations for recovery are starting to appear.
CBI director general Sir Richard Lambert told a Hays conference for chief executives: “It is beginning to look as if the UK could come out of this more quickly and with less blood on
the carpet than our Continental counterparts... I sense that in the short-term there are stabilising forces kicking.”
Mark Blackwell, sales director of property and mortgage outsourcing specialist Xit2 said: “We've been saying the CML's 2009 possession forecasts were overly-pessimistic for months. We forecast 65,000 repossessions at most.”
Reader views (1)
How many families in London are actually mortgaged up?I wouldn't say that many.A fair percentage are scroungers on benefits living in tower blocks where everything is on the never never.The only relief they get is from not having to get up in the mornings.
- Steve, London, 15/05/2009 15:59
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