FSA reports rise in repossessions and arrears

| January 22, 2009 | 0 Comments
FSA reports rise in repossessions and arrears

The Financial Services Authority (FSA) has reported that the number of home repossessions in the UK rose to 13,161 in the third quarter of 2008.

The figure had increased from 11,054 during the second quarter of last year and was up 92% on the same period of 2007.

In addition, the regulator found that the number of households with mortgage arrears rose an annual 24% during the three months to the end of September, to 340,000.

Compared with the second quarter of last year, 10% more homeowners were struggling to make their mortgage repayments.

Arrears are expected to rise sharply this year, with the Council of Mortgage Lenders (CML) predicting that the number of borrowers more than three months behind with their repayments will reach 500,000 or more than double the 210,000 estimated for 2008.

The CML expects 2009 to be a very tough year because of rising unemployment and is therefore also expecting around 75,000 homes to be repossessed.

Forecasts for negative equity are equally gloomy. With predictions that house prices will fall by up to 15% in 2009, credit rating agency Standard & Poor’s suggests that the number of homes with mortgages above their value could exceed the 1.8 million level seen in the 1990s.

Analysts at Citigroup have gone further and are forecasting that negative equity could afflict three million (one in five) UK households as the property market downturn continues and the recession bites.

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