Mortgage possessions 'will not be as bad as predicted'

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Mortgage possessions 'will not be as bad as predicted'

Although homeowners may struggle due to the effects of the credit crunch, the level of mortgage arrears and possessions will likely be lower than that seen in the early 1990s, it has been claimed.

Bernard Clarke, spokesperson for the Council of Mortgage Lenders (CML), said that it is unlikely that the UK will see "a price correction of the magnitude that we saw in the 1990s".

One of the reasons that the aftershocks will not be as severe is that there are currently "lower and more stable borrowing costs" than in the past decade, he explained.

However, Mr Clarke acknowledged that some households will probably encounter some problems due to tightened lending criteria.

"Those people who are most likely to be affected will be those who have some problems with their payment records in the past," he added.

The CML predicts that the number of loans in arrears of over three months will rise to 170,000 by the end of 2008.
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