Home repossessions up 54%

Home repossessions rose to 40,000 during 2008, according to data from the Council of Mortgage Lenders (CML).

The figure is up 54% on 2007, although 5,000 fewer than forecast.

The CML attributes the respite to mortgage lenders making “strenuous efforts” to ensure that repossession is used as a last resort.

The body also points out that the figures included a proportion of abandoned properties, cases involving property fraud and buy-to-let repossessions.

Turning to mortgage arrears, by the end of last year, around 182,600 mortgages (or 1.57% of the total) had accumulated arrears equivalent to 2.5% or more of the outstanding balance.

The proportion compares with 1.29% at the end of the third quarter of 2008, and 1.08% at the end of 2007.

In terms of the crucial three-month measure, 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 in the previous quarter and 127,500 at the end of 2007.

The Council describes government measures aimed at easing the rate of mortgage arrears and repossessions as “helpful” but with “limitations”.

These include changes to Income Support for Mortgage Interest and equity share and rent-back schemes provided by housing associations.

In addition, a Mortgage Support Scheme is under development whereby the Government will guarantee part of the increased risk lenders face if they allow borrowers to under-pay.

Commenting on the statistics, the CML’s director general, Michael Coogan, says: “both lenders and government are continuing to find more ways to help more people stay in their homes … but there seems to be a sharp rise in cases where borrowers are handing back their keys or abandoning their properties”.

Mr Coogan strongly urges borrowers in financial difficulties to contact their lenders and work with them.

He adds that: “Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests.”

Discuss this in the Finance Markets forums

Story link: Home repossessions up 54%