Home repossessions almost double

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The Independent Online

The number of people who lost their homes nearly doubled during the third quarter of last year, the City watchdog said today.

A total of 13,161 properties were repossessed during the three months to the end of September - 92 per cent more than during the same period of 2007, according to the Financial Services Authority.

The number of homeowners who were behind with their mortgage repayments also jumped to 340,000, a rise of 24 per cent during the year and 10 per cent higher than in the previous quarter.

The FSA said the number of people who have run up arrears of more than 1.5 per cent of their outstanding mortgage debt, roughly equivalent to being at least three months behind with repayments, has been slowly rising during the previous five quarters, increasing by around 4 per cent each quarter.

But it said the 10 per cent jump seen in the three months to the end of September was "more significant".

A further 30,000 people got into arrears during the third quarter, and 2.92 per cent of all mortgage holders are now behind with their repayments.

Among those who are in arrears, people are managing to pay an average of 42 per cent of their normal mortgage payment each month.

But despite the steep jump in repossession levels, the number of homes that were sold by lenders rose only slightly to 7,687, compared with 7,000 in the second quarter.

As a result, the number of repossessed homes that remained unsold jumped dramatically during the third quarter to 27,123 - 27 per cent more than during the previous three months and 111 per cent up on the same period of 2007.

The figures are in line with those reported by the Council of Mortgage Lenders (CML) in November for the same period.

These showed that 11,300 homes were repossessed by CML members during the third quarter of 2008 - 12 per cent more than in the second quarter - and the number of borrowers who were more than three months in arrears rose by 8 per cent to 168,000, although the CML measures arrears levels slightly differently to the FSA.

Other FSA figures on the mortgage market released today were also gloomy, with the total value of outstanding home loans edging ahead by just 0.5 per cent during the third quarter compared with the previous one to £1.194 trillion.

New advances during the period totalled £61 billion, half the peak of £102 billion reached during the third quarter of 2007, and 15 per cent lower than during the previous three months.

Net lending, which strips out redemptions and repayments, fell by 36 per cent during the three months and 65 per cent year-on-year to £14 billion.

Mortgage lenders continued to rein in business to people with impaired credit histories - so-called sub-prime borrowers - with new lending to this group accounting for just 1.5 per cent of total advances during the third quarter, compared with 3.5 per cent a year earlier.

They also continued to demand high deposits, with only 6.5 per cent of advances made to people borrowing 90 per cent or more of their home's value, compared with a peak of 15 per cent in early 2007.

The combination of people with high loan to value ratios and high income multiples also fell from 9 per cent of new lending for most of 2007, to just over 4 per cent in the three months to the end of September.

The FSA said that although 13,161 homes had been possessed by lenders, meaning that a court order had been granted enabling them to sell the property, in some cases they may not do this.

Adam Sampson, chief executive of housing charity Shelter, said: "These new figures are not just numbers, they are heartbreaking tales of real people losing their homes, and the rescue schemes announced by the Government recently will help just a fraction of those in trouble.

"While the Government yet again bails out some of Britain's floundering banks with billions of pounds, it is still seemingly unable to provide adequate support for millions of hard working homeowners."

Liberal Democrat housing spokeswoman Sarah Teather said: "This has been a miserable winter for thousands of families who were forced out of their homes.

"The sad fact is that the growing number of people in mortgage arrears suggests this will only get worse."

She called for the "out-of-date mortgage laws" to be updated to allow the courts to intervene.

A Communities and Local Government spokesman said: "We have already rolled out a £200 million mortgage rescue scheme to help vulnerable families remain in their homes, expanded free debt and legal advice, and are working urgently with lenders on the recently announced new homeowner mortgage support scheme to help hard working households if they suffer a loss of income.

"These measures will expand the support available to those who need it most, and give many households the breathing space to get back on their feet again and help ensure they do not face or fear repossession."

Shadow housing minister Grant Shapps said: "Gordon Brown's famous boast that he'd ended boom and bust will provide no comfort for the 13,000 more families who were repossessed over the summer.

"Even more worrying, these figures are from before the banking collapse so they may be just the tip of the iceberg.

"The Government has shown incredible complacency and instead of allowing the Housing Minster to talk about signs of an upturn in the housing market, Gordon Brown needs to pull his finger out and help the thousands of vulnerable families across the country."

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