HOME repossessions have risen to their highest level in 12 years, it emerged yesterday, intensifying the gloom surrounding the housing market.
The number of UK homeowners losing their properties after failing to keep up mortgage repayments soared by nearly half to 18,900 in the first half of the year. Those at least three months in arrears were up by almost a third.
Much of the increase
in repossessions is believed to have been among those with poor credit histories who have been unable to re-mortgage their homes.
The Financial Services Authority has warned specialist mortgage firms – which lend to such borrowers – that they were "too ready" to take court action against mortgage defaulters.
Experts believe Scotland may have fared better than the rest of the UK because there are fewer such "adverse credit loans" and lower house prices.
The Council of Mortgage Lenders (CML), which covers 98 per cent of the market, reported that repossessions across the UK jumped by 48 per cent from 12,800 to 18,900 between January and June, compared with the same period last year. The figure is 41 per cent more than in the last half of 2007.
The number of mortgages with payments at least three months in arrears increased by 29 per cent to 155,600.
The prospects for those affected appear grim, with interest rates likely to be held or increased.
There are also fears that further falls in house prices will plunge more than a million heavily indebted homeowners into negative equity – where the value of the home is less than the outstanding mortgage – at a time when new funding is scarce.
The figures come days after Alistair Darling, the Chancellor, caused uncertainty among house sellers by hinting that stamp duty – between 1 and 4 per cent of purchase prices above £125,000 – could be suspended this autumn.
Philip Hammond, the shadow Treasury chief secretary, said there was "clear evidence" that people were pulling out of deals as a result. He called on the government "to act immediately to shut down this damaging speculation one way or the other".
The CML said its figures "show no surprises" and should be kept in perspective. Its previous forecast of 45,000 repossessions this year was unchanged.
The 18,900 half-year total was less than half the figure when repossessions peaked during the 1991 housing market crash. The CML added that repossessions accounted for only 0.16 per cent of mortgages.
It said: "While arrears and possessions rates have risen across the industry, the impact of the credit crunch has hit the adverse credit sector harder than most of the mainstream market, which continues to perform well."
Graeme Brown, director of the housing and homelessness charity Shelter Scotland, said more and more people were seeking advice on repossession.
"Eviction must always be a measure of last resort," he said. "We urge lenders to ensure all other avenues have been addressed first and people who find themselves with problems seek help immediately."
Kennedy Foster, the CML policy consultant in Scotland, said: "Lenders say the position here is not as bad as in England and Wales. Mortgage affordability is better because house prices are lower against incomes compared with the south of the Border. A lot of the adverse credit sector is also focused on London and the south-east."
FACT BOX• OVER-STRETCHED borrowers with poor credit records have been unable to remortgage their homes because of a dramatic reduction in the types of loans available to them.
• Increased costs such as food and fuel have pushed some household budgets to breaking point.
• Some homeowners have been unable to afford large hikes in their mortgage payments after attractive low-rate fixed mortgage deals have come to an end.
• Unemployment. Government help with mortgage payments has been delayed from six to nine months after a homeowner loses their income.
• Divorce and death have been traditional factors in home repossessions, but may be less significant now because divorce rates are falling.
The full article contains 680 words and appears in The Scotsman newspaper.
