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Repossession levels soar amid widening gloom

Friday, 9 May 2008 2:05 PM

The number of mortgage possession claims in the UK has increased dramatically, according to the latest statistics from the Ministry of Justice.

During the first quarter of 2008 some 38,688 claims were issued by UK lenders.

In comparison some 35,662 mortgage possession claims were issued in the final quarter of 2007 - representing an increase of seven per cent.

Some 33,344 such claims were issued in the same period last year, 16 per cent lower than the figure for 2008.

The number of mortgage possession orders - when a court grants an order for possession of a home - was also up, the Ministry of Justice figures show.

Up to 27,530 mortgage possession orders were made in the first three months of the year, 17 per cent higher than in the first quarter of 2007.

The figure is also nine per cent higher than in the fourth quarter of 2007.

The Ministry of Justice figures represent the number properties entering the first stage of the repossession procedure - and do not reflect the actual number of homes repossessed.

In a number of cases homeowners are able to make arrangements with lenders in order to prevent their home being repossessed.

According to the figure 47 per cent of mortgage possession orders were suspended in the first quarter of this year, compared to 46 per cent in the fourth quarter of 2007.

"The financial pressure on many home owners is increasing, and it seems certain that repossessions will trend up appreciably over the coming months, particularly if the economy suffers an extended marked slowdown and unemployment starts rising, which seems likely," explained analyst Howard Archer of Global Insight.

The Council of Mortgage Lenders (CML) offers a further measure, with research showing 27,100 mortgages ended in actual repossession in 2007.

This represents 0.23 per cent of the market as a whole - less than half the level experienced during the early 1990s.

However, the CML expects the repossession rate to rise to 0.38 per cent this year - with 45,000 properties repossessed.

While higher than 2007, this is still very modest relative to the overall size of the UK market of 11.8 million mortgages.

The news of an increase follows an announcement on April 22nd from the government that those in financial trouble and facing repossession would receive assistance from the government.

Measures are particularly focused on the 1.4 million borrowers coming to the end of a fixed-rate deal during 2008.

With mortgage lending criteria tightening dramatically in first quarter of 2008, such borrowers are likely to face an increase in repayment rates.

In response the government has announced plans to develop a new debt advice service with the National Housing Advice Service; train specialist staff at Citizen's Advice; and arrange free legal representation for those facing a court appearance.

"For the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time," said Ms Flint in April.

"It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early 1990s".

Chris O'Toole

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