Housing repossessions 'won't reach 1990s levels' » Housing » 24dash.com

Home repossessions will not reach the levels seen in the early 1990s despite the tough challenges ahead for the UK economy, Bank of England Governor Mervyn King said today.

Falling house prices and dearer mortgage deals from lenders have raised fears that thousands more borrowers could lose their homes in the looming slowdown.

But Mr King said today repossessions were "markedly below" the levels seen at the peak of the last recession, with just 1% of borrowers more than three months in arrears compared to 6% then.

He said: "It is worth hanging onto the fact when families get into difficulties the question is what affects their ability to service mortgage debt.

"What caused major problems in the 1990s was the doubling of interest rates and the very sharp increase in unemployment. None of these things apply at present, neither are they part of our central projections.

Despite the Governor's reassurances, the Council of Mortgage Lenders is forecasting that the number of actual repossessions this year will be 45,000, up from 27,100 last year.

There were a total of nearly 76,000 during 1991, the height of the UK's last recession, with a total of 142,905 repossession orders during the year.

Government data published last week showed a total of 27,530 mortgage repossession orders were made during the first three months of 2008, up 17% from the same period a year earlier.

But Mr King added that orders had risen more sharply than actual repossessions because lenders were simply looking to encourage repayment.