Money News: Homes at risk as repossessions hit 12-year high

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The Independent Online

The number of court actions for home repossessions has risen to its highest level in 12 years during the past three months, as households struggle to cope with escalating debts.

The number of repossession applications in the three months to the end of September stood at nearly 30,000 - a rise of 55 per cent on the same period last year - according to the Department for Constitutional Affairs.

Court orders made during this period - granting a warrant for possession - went up 66 per cent from 11,862 to 19,867.

But, disturbing as they are, these figures do not reflect the true number of households in financial difficulty, because lenders and homeowners often negotiate a compromise to prevent eviction.

However, figures from the Council of Mortgage Lenders (CML) showed that the number of homes actually repossessed in the first half of this year rose to 4,640 - up from 3,070 in the previous six months.

Lenders have blamed rising interest rates for the problems thousands of homeowners are facing in meeting their monthly mortgage repayments. Although the Bank of England cut its lending rate to 4.5 per cent in August, the cost of borrowing rose from 3.5 per cent to 4.75 per cent between November 2003 and August 2004.

Chris Holmes, chief executive of the debt advisory service All Clear Finance, warned that many people with serious debts were at risk of losing their homes. "Those facing debt problems need appropriate advice and should seek it as soon as possible," he said.

Lenders give poor families a raw deal

Low-income households could be paying too much for loans, new findings show.

The home credit industry supplies loans to those who are on limited incomes, or who may have difficulty getting other forms of credit. Repayments are then collected in instalments from the customer's home.

Last week, the Competition Commission (CC), which is involved in an inquiry into the sector, said there was little evidence of customers switching between providers, or of price falls as a result of competition in the market.

In its preliminary report, the CC said home credit customers appeared " generally happy" with the loans they received - but that they paid a high price for them.

"Various factors appear to point towards a lack of effective competition, which may mean home credit customers pay more than they should," said the CC's acting chairman, Peter Freeman.

The findings were welcomed as "extremely positive and encouraging" by the National Consumer Council, which sparked the inquiry last year when it launched a "super-complaint" to the Office of Fair Trading.

This showed clear evidence of the damaging impact of high interest charges on disadvantaged families, and highlighted a lack of information on costs and alternatives.

Claire Whyley, spokes-woman for the National Consumer Council, said: " We hope [this inquiry] will lead to a fairer deal for Britain's two million poorest people who use home credit to make ends meet."

The bulk of the home credit market is in the hands of four providers, raising concerns that this makes the industry uncompetitive.

Internet users urged to put safety first

Internet users who shop, bank and communicate on the web are being targeted in a new campaign aimed at encouraging people to protect themselves against online crime.

The online retail economy is worth £10bn a year, and 14 million people use internet banks. With these figures in mind, the Get Safe Online campaign ( www.getsafeonline.org), launched last Thursday, is urging users to take the threat of spam mail, viruses and online fraud more seriously.

A report accompanying the launch shows that more than three-quarters of internet users don't know enough about protecting themselves, and that four in 10 rely on friends and family for online safety advice.

But while one in five claim to be more concerned about internet crime than crimes such as car theft and mugging, the same proportion admit to opening suspicious files from unknown sources - which could contain viruses.

The campaign is a joint initiative between the Government, the National Hi-Tech Crime Unit (part of the National Crime Squad) and commercial organisations that conduct business online, including BT, Dell, eBay and HSBC.

John Hutton, the cabinet minister responsible for e-government, said the internet had become an "essential tool for businesses and consumers".

But he added: "While it has brought enormous benefits, we know there are risks too. We want to make the internet a safer place to make financial transactions and exchange personal information."

Claims rocket on fireworks night

Homeowners are being urged to take extra safety precautions on 5 November, which is said to be the worst day of the year for burglaries.

The insurer Norwich Union (NU) reports that claims for theft on bonfire night can be 20 per cent higher than average. It says criminals take advantage of properties left empty while people are out at organised firework displays, or even in their gardens. To make matters worse, the noise of fireworks can mask any sounds of forced entry.

In addition, the insurer warns that people often neglect home security more generally. For example, more than a quarter of householders do not lock their front door when at home.

Accidental damage also leads to a sharp rise in claims on buildings and contents policies at this time of year. Churchill Insurance found that nearly two million people in the UK had reported damage to their home or car as a result of fireworks going astray.

Homeowners are urged to check they are adequately covered against accidents.

James Harrison of the price comparison service Insurancewide.com advised householders: "Your home contents policy should cover you for accidental damage caused by fire to anything in your garden, including the shed - or any damage you cause to your neighbour's garden. But insurers emphasise you should exercise due care and attention."

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