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8 February 2008 - as reported in
Home repossessions rise to 27,000
The number of people whose homes were repossessed last year has
risen by 21%.
The Council of Mortgage Lenders said 27,100 homes, the highest
figure since 1999, were taken over by lenders after people fell
behind with repayments.
The figure for the UK is more than the 22,400 in 2006, but not
as extreme as the CML had forecast. It is still a sharp rise on
the 8,500 of 2003.
And the CML warned that the number of repossessions was likely
to rise again in 2008 as the credit crunch tightened.
Meanwhile, the numbers of mortgages behind on payments rose by
8.6% compared to 2006, the organisation, which represents
mortgage lenders, said.
'Wider issues'
"Another bill would come up which you would be paying on a
credit card and you would have to pay the interest on the
cards... all that adds up"
Kevin Allen, who faced repossession.
Added cost pressures on homeowners are expected this year, owing
to higher energy and food bills, while more than a million
people are coming off fixed-rate mortgages.
Michael Coogan, CML director general, said: "The number of
repossessions is likely to be higher in 2008 as a result of
wider issues in the economy and the mortgage funding markets."
He said that "no one is necessarily to blame for this" but
called for "a fair and reasonable balance of responsibility".
Mr Coogan said consumers, their advisers and lenders, and the
system of state support, all had a role to play to ensure
"repossessions are minimised".
Tighter credit market
The rise in repossessions was likely to be down primarily to the
credit crunch, with lenders taking fewer risks with borrowers
who were already over-extended.
Charities have previously warned about some homeowners using
credit cards to pay their mortgages, but with credit
increasingly difficult to come by, many have been struggling to
meet repayments.
Most mortgage possession claims do not end with the owner losing
their home, because the lender often comes to an arrangement
with the borrower to pay off the arrears.
But Sue Edwards, head of consumer policy at Citizens Advice,
said:
"Our evidence shows that lenders are not always doing everything
they can to help borrowers in trouble, all too often piling on
extra charges and being too quick to take court action rather
than being prepared to negotiate affordable repayment
arrangements.
"We want to see all lenders being reasonable when dealing with
customers who do get into trouble, and taking court action for
possession only as a last resort."
And Shadow Housing Minister Grant Shapps said: "These figures
sadly make a mockery of Labour's hollow claims to have helped
more people onto the property ladder."
Interest rates
Despite the latest rise in repossessions, figures are still much
lower than the numbers in the early 1990s. when they reached
75,500 repossessions a year.
The CML figures have been released the day after many of the
largest - but not all - mortgage lenders announced they would
pass on the 0.25% cut in interest rates in full to customers.
These lenders said the cut on the standard variable rate would
come in early March.
Simon Rubinsohn, chief economist of the Royal Institution of
Chartered Surveyors, predicted further interest rates in the
coming months, offering more relief to homeowners.
Godfrey Blight, chairman of the Intermediary Mortgages Lenders
Association, said arrears and repossessions would rise in 2008,
but not "catastrophically so".
Insolvencies
On Monday, the Insolvency Service said the number of people
declared insolvent in 2007 fell marginally - having peaked the
previous year.
The number of individual insolvencies dropped by 0.6% last year
to 106,645, compared to a record high in 2006.
Bankruptcy orders were 2.4% higher than 2006 at 64,480, but
Individual Voluntary Arrangements were down 4.9% to 42,165 last
year compared to 2006.
Experts said it would be increasingly difficult for people to
borrow their way out of trouble.
Those who fear getting into trouble with mortgage repayments
have been urged to speak to their lender.