08/08/2008

Massive Increase In Home Repossessions

The number of mortgage arrears and repossessions of homes in the first half of 2008 have increased by 41% according to the latest data from the Council of Mortgage Lenders (CML).

The CML is maintaining its forecast of 45,000 total possessions and 170,000 mortgages in arrears of more than three months by the end of the year.

The CML numbers relate only to first mortgages, not to other consumer loans secured on people's homes.

The possession rate - that is, the proportion of all mortgages on which possession occurred in the period - was 0.16% in the first half of the year, up from 0.11% in both the first and second halves of 2007. The possession rate now is similar to that of the late 1990s, but remains less than half the rate experienced in the early 1990s.

On arrears, the total number of households with arrears of three months or more was 155,600 at the end of the first half of the year, up from 129,600 at the end of 2007 and 120,800 at the end of the first half of last year. The arrears rate stood at 1.33% of all mortgages, up from 1.10% at the end of 2007 and 1.02% at the end of the first half of last year.

The CML has been working extensively with the government, consumer groups, the FSA and the courts to ensure that as much as possible is done to help borrowers who may be facing financial problems, and to manage arrears effectively in business terms.

Commenting on the current situation, CML Director General Michael Coogan said: "The number of people facing difficulty needs to be kept in perspective. The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals.

"But it is inevitable that more borrowers' coping strategies will come under pressure in current conditions than in the unusually benign years of the last decade. That's why lenders, government and the advice sector are working closely together to minimise the impact on borrowers.

"We will continue to work on behalf of the whole industry with the FSA and others to ensure fair practices are maintained. And we continue to press the government to play its part in creating an effective safety net for vulnerable borrowers facing a short term loss of income through better state support.

"No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender. Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options - the earlier the better."

(CD/JM)

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