Alarming rise in repossessions
Some of the larger mortgage lenders are reporting sharp increases in the number of home repossessions since the beginning of the year.
The disturbing trend is likely to continue as experts claims that it could take 15 months for the full effect of the five base rate rises since August 2006 to filter through.
The Bank of England’s base rate has risen by 1.25% in a year and is expected to rise to at least 6% this autumn.
For some lenders, repossession rates have doubled in the first-half of 2007, compared with the same period in 2006.
Last year the figure for repossessions stood at 17,000, two-thirds higher than 2005 and there are fears that in 2008/9 the figure could increase to its 1998 level, when 33,870 homes were repossessed.
Northern Rock, the UK’s third-largest lender, saw repossession cases nearly double to 1,536 during the six months to the end of June.
Abbey, the second-largest lender, recorded a 10.5% increase, Bradford & Bingley a 31% increase, and Alliance & Leicester a 78% increase.
According to the Financial Services Authority (FSA) the situations is being exacerbated by lenders and mortgage brokers lending irresponsibly to those with a record of debt and credit problems.
The FSA expects this kind of lending, known as sub-prime, to increase the level of repossession.
Its view is supported by Moneyfacts, the financial data analyst, which has reported that some borrowers with poor credit histories are being asked to pay interest rates of up to 11.35% for a home loan.
Later this week, the Council of Mortgage Lenders will announce its official repossession figures for the first six months of the year, for the lending industry as a whole.
Visited 1520 times, 1 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.