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Repossession rates increasing

Repossessions up 71% as unemployment figures soar

Wednesday, 29 October 2008

Writes Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk

120 Brits a day are losing their homes, while millions more face negative equity and unemployment.

The number of house repossessions has increased more than 70% in a year, according to figures released by the Financial Services Authority (FSA). It said yesterday that lenders had repossessed 11,054 homes in the second quarter of this year, compared with just 6,476 in the same period a year ago.

The situation could get worse, as the number of mortgage holders who are more than three months behind with payments has increased by 16% to 312,332 and average arrears have rocketed up £700 to £4,800 since this time last year.

Adam Sampson, chief executive of homelessness charity Shelter (www.shelter.org.uk) said that the number of people contacting Shelter for advice on repossessions has increased by 167% in the past six months.

Mr Sampson said: “These figures are not only shocking and worse than expected, they highlight the crippling severity of the credit crunch on ordinary homeowners.”

The Bank of England added to the gloomy figures yesterday when it estimated that 500,000 UK homeowners are currently in negative equity. It predicted that this number could rise to 1.2 million if house prices fall by another 15% - as they have since their October 2007 peak.

Furthermore, unemployment jumped by 164,000 in the three months to the end of August. It’s the biggest increase in 17 years and means 1.79 million people are unemployed. Economists predict that this figure could rise to two million by Christmas.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “Not everyone who is struggling to make repayments will have their home repossessed, but it is a very real fear for many. If you find yourself in financial difficulty it is essential that you contact your lender as soon as possible. Lenders have procedures for tackling payment difficulties and the sooner you let them know you are having problems, the sooner they can help.”

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