Repossessions Set to Rise
November 24th, 2008 by 
Guy
The number of repossessed houses has not been this high since the early 1990s and there is a chance it will get worse before it gets betteras more home owners fall behind with their mortgage payments.
The new figures come as Alistair Darling prepares to announce measures in the pre-Budget report today to help out home owners.
He is expected to bring in new rules that for anyone who miss a mortgage payment will be given a minimum term of three months to work with the lender to sort out the problem.
The amount of people being evicted from their homes rose 12 % in the last three months, according to the Council of Mortgage Lenders.
11,300 people had their houses repossessed in the three months to the end of September, compared with 10,100 in the previous quarter.
Borrowers who went into arrears on their mortgage also increased, reaching 168,000 cases by the end of September - 8 per cent higher than the 155,600 at the end of June.
The latest set of figures is almost the same as the 170,000 that the CML had previously forecast for the whole of 2008.
It comes as unemployment is rising and concerns about how people will afford their mortgage if they lose their job.
Despite the rise in the amount arrears, the CML still expects about 45,000 repossessions this year. Taking into account the possessions figures announced so far this year, it leaves 26,100 people who are expected to lose their home before the end of the year.
Possessions were last this high during the second half of 1993, at 26,800. They reached a height of 38,900 for the last six months of 1991, according to the CML.
Ed Stansfield, property economist at Capital Economics, said: “Given the economic outlook, we suspect that possessions will also get pretty close to their previous record highs.”
Howard Archer, economist at Global Insight, said: “The number of repossessions seems sure to rise substantially further over the final quarter of 2008 and, more especially, in 2009, however sympathetic lenders are.”
The figures also showed possessions on buy-to-let properties were maintained at the same level as the two previous quarters at 900. But the CML expects this figure to rise amid falling rents and an oversupply of rental properties.
The Government has warned lenders to ensure that repossession is only ever a last resort.
However, even Michael Coogan, director general of the CML, said: “Looking ahead, conditions in the wider economy suggest a worsening picture for mortgage arrears, however carefully lenders handle their treatment of borrowers in difficulty.”
Repossession figures have also been released by the Government, which showed 29,516 mortgage possession orders were made in courts in England and Wales in the three months to the end of September.
The figure is 24 per cent higher than the same period in 2007 and 3 per cent higher than the second quarter of this year.
However, 47 per cent of orders were suspended and not all of them will lead to a home being repossessed.
Posted in Mortgage news | 