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Home repossessions rise to 27,000 Home repossessions rise to 27,000
(about 1 hour later)
The number of people whose homes were repossessed last year has risen by 21%.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 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.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. 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 in arrears rose by 8.6% compared to 2006, it said. Meanwhile, the numbers of mortgages behind on payments rose by 8.6% compared to 2006, the organisation, which represents mortgage lenders, said.
'Wider issues''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 Homeowners 'on the rack'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 Homeowners 'on the rack'
Added pressures on homeowners are expected this year, owing to higher energy bills, food costs and more than a million people coming off fixed-rate mortgages. 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."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". 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".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 marketTighter 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 extending themselves. 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 this credit increasingly difficult to come by they have been struggling to meet repayments. 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, often because the lender comes to an arrangement with the borrower. 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.
Repossession figures are still far below levels in the early 1990sRepossession figures are still far below levels in the early 1990s
This was the case with self-employed van driver Andrew, who had to spend time away from work to support his mother after his father died. But Sue Edwards, head of consumer policy at Citizens Advice, said:
This and some expensive repair bills for his van meant he missed some mortgage and council tax payments. "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.
When he was £3,000 in arrears and facing a repossession hearing two weeks later, he sought help from the Consumer Credit Counselling Service (CCCS). "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."
They helped him to prepare a budget, separating business and personal costs. He made a proposal at the hearing which was accepted by the lender and he kept his home. Lowser interest rates
The CCCS has been piloting a repossessions centre with ten advisers since November. 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.
It says those people they have suggested sell their homes - rather than have them repossessed - typically have three-quarters of their take-home pay committed to mortgage repayments.
Interest rates
Despite the latest rise in repossessions, figures are still much lower than the numbers in the early 1990s - when there were around 80,000 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.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.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.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.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.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.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.Those who fear getting into trouble with mortgage repayments have been urged to speak to their lender.
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