Research and analysis

Mortgage arrears and possessions: forecasts

In January 2012 DCLG commissioned Professor Muellbauer, of Oxford University, to update his model which forecasts repossessions and loans in…

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In January 2012 DCLG commissioned Professor Muellbauer, of Oxford University, to update his model which forecasts repossessions and loans in arrears in the UK and to produce updated forecasts.

This research report sets out the changes to the model since the last report and the revised forecasts. This update led to the inclusion of an extra eight observations, together with a number of data revisions. The update also means that the forecast of loans in arrears and repossession now draws upon a range of economic forecast scenarios based mainly on underlying forecast data from the Office for Budget Responsibility but also from Oxford Economics for comparison.

The new forecasts represent an improved outlook for both repossessions and arrears compared to the previous forecast. The main reason being the change in interest rate expectations; interest rates are now expected to rise much later; in mid 2013, instead of early 2012.