Rise in repossessions set to worsen housing crisis

The grim state of the housing market will be underlined tomorrow by figures expected to show a small increase in the number of families losing their home for the first time in four years.

Even though we have got used to having a housing crisis rather than a housing market, evidence of a new tide of repossessions will probably push the Government into action. It did in 1991, when the then Chancellor Norman Lamont introduced the stamp duty holiday and arm-twisted building societies into launching mortgage rescue schemes.

Following tomorrow's statistics from the Council of Mortgage Lenders, forecasts to be published later this week by the stockbroker UBS predict the number of repossessions will climb from 49,210 last year to 55,000 this year and 65,000 in 1996. The analyst Robert Thomas says: ''With this week's figures we will find out whether we have learnt to live with this problem or whether another increase will force the Government into action.''

John Wriglesworth, director of strategy at Bradford & Bingley Building Society, argues that with the number of repossessions likely to stay high until the end of the century, ''the Government must do something to restore faith in the housing market.''

The mortgage lenders have been lobbying hard for a government retreat from its plans to cut back income support for mortgage payments, due to come into effect in October. The industry saw the Government's switch to direct payment of income support to lenders in 1992 as a quid pro quo for their agreement to rein back the number of repossessions. They believe the Government is breaking its side of the bargain.

Adrian Coles, director general of the Council of Mortgage Lenders, warns that the income support cuts will be a direct threat to the downward trend in mortgage arrears and repossessions. He said lenders were continuing to help troubled borrowers, ''yet the Government does not appear to be showing an equal long-term commitment to bringing down mortgage arears.''

Julian Birch, of the housing charity Shelter, agrees that the lenders will increase the pace of repossessions if there is no government retreat. ''The main need is stability at the bottom end of the market,'' he says. ''The changes to income support will have exactly the opposite effect.''

A pick-up in repossessions in a moribund market could have wider repercussions. If most mortgage lenders decided to get tougher with households in arrears later this year, a new wave of sales mainly at the bottom end of the market might well push house prices lower.

However, lenders hold out little hope of any more than a cosmetic adjustment to the income support restrictions. They fear instead a quick-fix gimmick in the Budget.

A number of big lenders favour one proposal, floated by the Prime Minister's policy unit, to phase out tax relief on mortgage interest payments and replace it with a one-off grant for moving. Others would be horrified by further erosion of the tax relief, which Mr Major has anyway publicly ruled out.

A second measure that would also win favour would be the abolition of stamp duty. What the industry, backed by the entire economics profession, does not want is a temporary stimulus.

Michael Hughes, director of research at BZW, says: ''The problems affecting the housing market are structural. There would be dangers in any measures which might bring results before the General Election.''

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Life and Style
food + drink
Arts and Entertainment
a clockwork orange, stanley kubrick
filmSony could have made a cult classic
Life and Style
fashionThe essential guide to all the designer Christmas sale dates
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
news... you won't believe how bad their skills were

Arts and Entertainment
Mark Wright and Mark Wright
tvStrictly goes head-to-head with Apprentice
footballPremier League preview: All the talking points ahead of this weekend's clashes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas