UK Housing Market Sailing Through Calmer Water During Q1
Fewer UK households are falling behind on the monthly mortgage, according to recent data posted by the Financial Services Authority (FSA). In other words, the housing market saw some twinkling of stabilizing during the first quarter of the year. The total number of households in arrears totaled just over 335,000 compared with more than 343,000 during the last quarter of 2010.
More importantly, the number of home mortgage payments falling into arrears is slowing down, almost at a 10% slower rate compared with Q4 of last year.
These figures should be taken with a grain of salt though, as lending criteria has clearly tightened up compared with a few months ago. Banks are becoming less patient and thus are less likely to proceed with forbearance. For example, more and more loans are being let go to just ride out and see what happens. They are being acted upon by lenders sometimes in the most severe ways. The number of loans which sums failed to be paid upon without action fell drastically in Q1 to 1,638. This is in sharp contrast to more than 2,000 in Q4 of last year.
UK banks and other lending facilities are being led down a straight and narrow path when it comes to forbearance. The FSA published a suggestion guide, so to speak, for the banks to follow in regard to the best way of handling forbearance issues. Ultimately, lenders do not want loans being defaulted on every time they turn around. It creates extra work and nobody wins in the short term.