House repossessions soar to 12-year-high

Sunday 23 October 2011 05:13

The number of UK house repossessions jumped by 48 per cent in the first half of the year to its highest level for 12 years, figures showed today.

A total of 18,900 homes were taken back by lenders after their owners failed to keep up with mortgage repayments - the equivalent of 0.16 per cent all mortgages, the Council of Mortgage Lenders said.

The CML forecasts that 45,000 homes will be repossessed by the end of the year as cash-strapped borrowers struggle to repay their mortgages.

The Financial Services Authority fired a warning shot to lenders earlier this week after finding that specialist mortgage firms were "too ready" to take court action against borrowers.

Today's half-year data compares with 120,800 homes repossessed at the end of June 2007 and 129,600 at the end of December.

The CML said the rate of repossession, at 0.16 per cent, was now the highest seen for 10 years.

But it stressed this was still low in the context of the entire mortgage market and less than half that experienced amid the housing market crash of the early 1990s.

Today's figures also reveal that the number of mortgages three months or more in arrears has risen by 29 per cent year on year to 155,600 at the end of the first half.

This is equivalent to 1.33 per cent of all home loans, although the number of mortgages more than six months in arrears was 0.58 per cent of all loans.

Housing charity Shelter said today's figures were "shocking", adding that hard-pressed homeowners are also now only given state help after nine months, too late to prevent many from losing their homes, it claimed.

Chief executive Adam Sampson said: "Behind these figures are thousands of families facing sleepless nights worrying about how to make their next mortgage payment, and many thousands more will be waking up to the frightening reality of repossession.

"Government urgently needs to step in to prevent thousands more families from losing their homes and provide the significant financial support troubled homeowners need to keep a roof over their head."

The CML recently set out plans to minimise the number of people who have their homes repossessed as the figures soar higher following the credit crunch.

It said members had committed to four measures to help borrowers, including reviewing its own policies and a pre-action protocol to ensure that repossession is a last resort.

However, the findings of a Financial Services Authority review earlier this week found that specialist mortgage lenders were too quick to take borrowers to court and were focusing their efforts too strongly on recovering arrears.

The FSA is also considering referring several firms to enforcement action after uncovering irresponsible lending practices among lenders, particularly those in the sub-prime market, such as failure to check borrower income.

Howard Archer, chief economist at Global Insight, said the CML figures showed borrowers were increasingly struggling, but added that the Bank of England was unlikely to be able to offer relief soon in the form of lower interest rates.

Yesterday the Bank voted to keep rates on hold for the fourth month in a row, at 5%, and are not expected to trim the cost of borrowing until at least towards the end of the year.

"Current elevated inflation levels and risks mean that the Bank of England is unlikely to provide any help to financially stretched individuals by cutting interest rates any time soon," said Mr Archer.

"Indeed, there is still a genuine possibility that the Bank of England could even raise interest rates, which would be an alarming prospect for a number of households."

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments