Homes at repossession risk up by quarter

Click to follow
The Independent Online

The number of homeowners at risk of losing their homes has risen by nearly a quarter in the past year, figures showed today.

Government data showed a total of 28,658 mortgage possession orders were made in England and Wales during the second quarter of this year, up 24 per cent from the same period a year ago. It is a 4 per cent rise compared to the first three months of 2008.

Today's figures from the Ministry of Justice relate to court activity which may not result in a possession. As a result the figures are usually higher than those published by the Council of Mortgage Lenders (CML), which last week reported 18,900 UK repossessions, up 48 per cent on the same period last year.

A mortgage repossession order is granted by a court and entitles the claimant - usually a lender - to apply to have the occupier evicted. A claim is issued in a county court and begins an action for a repossession order.

The MoJ said there were 39,078 mortgage possession claims in the second quarter of 2008, an increase of 17 per cent on 2007 but unchanged on the first quarter.

The number of repossession claims reached a 15-year high at 137,591 last year and has continued to climb as the higher cost of mortgages hits homeowners following a series of interest rate rises last year.

In recent months homeowners have had to re-fix their mortgages at significantly higher mortgage rates after the cheap fixed loans they took out several years ago expired.

Lenders have also become increasingly risk-averse amid the credit crunch, with many people at the end of short-term deals finding it hard to remortgage and often forced on to their lender's more expensive standard variable rate.

Housing charity Shelter said mortgage lenders were "still using repossession as the first rather than last resort" and said the proportion of people coming to the charity for help with mortgage possession actions over the past six months had increased by 55 per cent.

Chief executive Adam Sampson said: "Every day Shelter is seeing more and more ordinary hardworking people who are terrified of losing their homes. They're being punished by rising household bills, escalating fuel charges and food prices that are going through the roof.

"Tens of thousands are living with the fear of having the home they've worked so hard for being repossessed by lenders with little compassion."

Mr Sampson urged people who are finding it difficult to meet their mortgage payments to seek advice early.

He added: "Lenders must play their part and ensure they look at all the options before rushing to the court, and use repossession as the last rather than first option.

"The Government needs to show it really is on people's side when they are facing the threat of repossession."

A Government spokesman said today's statistics relate to court orders and that action can still be taken to avoid repossession.

Housing Minister Caroline Flint said: "Whilst we are not seeing repossessions on the same scale as the early 1990s, we are making sure the right advice and support is available for the minority of borrowers who may need it at the moment because of global economic pressures.

"As well as expanding free legal representation in county courts for households at risk of repossession, we are providing more free debt advice, and are working closely with lenders to ensure that repossession is only ever a last resort.

"These services can make a real difference, with more than 80% of repossessions avoided when they are used. It is important that families who have concerns seek advice at the earliest opportunity, starting by speaking to their lender.

Looking for credit card or current account deals? Search here