Repossession orders rising

The number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008 compared with the same period of 2007, from 2,438 to 27,530.

The repossession figures for the first half of 2008 will be published in August. The Council of Mortgage Lenders predicts that there will be 45,000 repossessions in 2008, up from 27,100 in the previous year. This compares with 11.8 million outstanding mortgages in the UK.

The government says there will be more free legal advice for those at risk of repossession, along with specialist training for debt advice agencies.

More at risk of repossession?

Government figures suggest that nearly 60,000 homes might be at high risk of repossession.

The Housing Statistics 2007 report says that almost 60,000 families with disposable incomes below £1,000 each month are paying £750 a month on mortgage payments. Nearly 20,000 families earning up to £1,000 per month are spending 100% of this on mortgage repayments.

As food prices, petrol, and taxes rise, disposable incomes will probably fall. That will put them closer to the tipping point - especially those who are on cheap introductory offers which they can't refinance.

And the values of their homes probably won't have risen meanwhile.

More concern about repossessions

We blogged the Lib Dems' concern about repossessions. Now The Citizens Advice Bureau (CAB) has renewed its call for tighter regulation of the mortgage market.

In 2007 they dealt with over 57,000 mortgage and secured loan arrears problems for consumers - an 11% increase on the previous year. They say

The findings of our December 2007 report on home ownership and debt "Set up to fail" showed that the current safety nets for homeowners on low incomes facing payment problems, such as income support for mortgage interest (ISMI), are completely inadequate, and these latest figures reinforce the need for much better quality and better value insurance products, for reform of ISMI, and for a housing benefit for homeowners similar to the help with rent available to tenants on low incomes.

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.

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.

The CAB is calling for tougher enforcement of existing regulation of mortgages, and for the same regulatory system to apply to all mortgages and other secured lending in future.

So if you get into difficulties, your lender ought to be reasonable and not punitive.

Lib Dems want more repossession safeguards

Nick Clegg, the Lib Dem leader, wants to make financial advice compulsory at the point repossession claims are issued, to ensure "repossession is only a last resort".

He says the rise in repossessions cannot be allowed to become an epidemic because it would "turn a housing market slowdown into a full-on slump". Banks should agree practices to prevent large-scale repossessions such as "allowing those in arrears because of circumstances beyond their control to move to shared ownership arrangements".

Home repossessions rise to 27,000

The number of homes in the UK repossessed by lenders rose last year by 21%, to 27,100.

This is the highest figure since 1999, more than the 22,400 in 2006, and far more than the 8,500 of 2003.

The number of mortgages in arrears rose by 8.6% compared to 2006. Repossessions are expected to rise again this year.

Added pressures on homeowners are expected this year, owing to higher energy bills, food costs, banks cutting back on credit card borrowing, and more than a million people coming off fixed-rate mortgages.