Home repossession orders soar to 10-year high

The number of households facing the loss of their home surged by one-third in the first three months of the year to its highest level for at least a decade.

The number of households facing the loss of their home surged by one-third in the first three months of the year to its highest level for at least a decade.

Mortgage lenders launched county court actions for almost 26,000 repossessions in those months, up 35 per cent on the previous quarter, figures showed yesterday.

It is the largest number of court actions since the beginning of 1995, when the government started collating these figures.

Analysts warned it was further evidence of the strain homeowners were under, while the housing industry said the increase was against a background of a historically low number of actual repossessions and a strong economy.

Ed Stansfield, a property economist at Capital Economics, which is forecasting a 20 per cent drop in prices, said: "It adds to the sense that the benefits of low interest rates for many homebuyers is less than is widely perceived."

He said high house prices and debt levels meant even small rises in mortgage rates had a disproportionately large effect. "The housing market looks very overstretched and interest rates have been rising, and this is just another sign that the number of people struggling with debts is on the increase," Mr Stansfield said.

Keith Stevens, an insolvency partner at the accountants Wilkins Kennedy, said: "The interest rate rises have really started to bite. It seems clear that many householders were building up unsustainably high levels of debt when rates were low. As rates rise further and more discounted mortgages come to an end we have to expect that more borrowers are going to find themselves under water."

A spokesman for the Council of Mortgage Lenders said the volume of actions did not reflect the number of repossessions, which were running at historic lows of about 1,500 a quarter. It forecasts that the number will rise from last year's 6,230 to 10,700 in 2007, still well below levels seen after the property crash of the early Nineties.

There was more gloom on the housing market yesterday as Countrywide, the UK's biggest estate agency chain, warned of a first-quarter loss, prompting a sharp fall in its shares.