UK home repossessions rise again » Bill payments » 24dash.com

More than 11,000 homes were repossessed during the third quarter of the year, 12% higher than in the second quarter, figures out today showed.

The Council of Mortgage Lenders' data released today showed 11,300 homes were repossessed in the third quarter of the year. Despite the increase, the CML said it still expected about 45,000 repossessions this year.

However, the CML said the number of households in mortgage arrears by the end of the year was likely to exceed forecasts as its figures showed 168,000 households were in arrears at the end of September 2009, 8% higher than the 155,600 at the end of June.

According to Ministry of Justice figures also out today, 29,516 mortgage possession orders have been made in courts in England and Wales by all lenders in the third quarter, 24% higher than in the same period in 2007.

However, 47% of orders were suspended and not all of them will lead to a home being repossessed.

Housing Minister Margaret Beckett said: "We are determined that households should have access to as much help as possible to cope in the tougher times ahead, and we will do everything we can to ensure repossession is always a last resort.

"The Government is taking action to protect the most vulnerable families from repossession, including a new court protocol to make sure lenders are exploring all avenues before making a claim in the courts, a £200 million mortgage rescue scheme, more free legal representation in county courts, and more free debt advice.

"Lenders need to be doing everything they can to help families facing difficulties. We are continuing to work closely with them to look at what more we can do and plan to make further announcements shortly."

The CML said "in a worsening economy", its previous forecast that 170,000 households would fall into mortgage arrears by the end of the year was likely to be exceeded.

But director general Michael Coogan said lenders would "look at every possible way of minimising repossessions", which is why the forecast number of repossessions remained unchanged.

"The CML and lenders are absolutely committed to ensuring that repossession is only ever a last resort," he said.

"Most borrowers who face payment problems successfully keep their home by working with their lender - anyone worried about mortgage payments should contact their lender at the earliest opportunity, before arrears start to build up."

He said the Government had taken "some helpful steps" to support vulnerable households, but urged ministers to go further.

"Increased help with housing costs is needed for a wider range of borrowers facing unforeseen repayment difficulties where there would otherwise be little prospect of early improvement," he said.

"Next week's pre-Budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited."

The number of people who have lost their homes has been steadily increasing since 1996 and about 18,900 homes were taken over by lenders during the first six months of the year according to the CML, the highest figure for 12 years.

If the CML's prediction of 45,000 repossessions in 2008 proves to be right, this would be the highest figure since 1995.

The CML figures show 900 properties owned by buy-to-let investors were repossessed in the third quarter, the same as in the first and second quarters of the year.

But the CML said this resilience was "unlikely to be maintained" in the future, although a range of factors would affect repossession of buy-to-let properties, including strategies like appointing lenders as receivers of rental income.

It said the payment profile of buy-to-let lending had worsened more rapidly than the market as a whole because of falling rents and over supply in some areas. It said fraud was also likely to have been a contributory factor.

The Government has launched a range of initiatives to help people who cannot keep up with their mortgage to stay in their home.

These include enabling them to sell their home and rent it back from a social landlord, or enter into a shared equity or shared ownership scheme on their property.

A new pre-action protocol also came into force on Wednesday in which the courts must stop repossession actions unless all alternatives to keep people in their home have failed.

The Insolvency Service published figures earlier this month which showed that 27,087 people were made insolvent during the third quarter, 8.8% more than in the previous three months.

They also showed that a record 17,341 people were made bankrupt during the period on a seasonally adjusted basis.

Today's figures published by the CML cover arrears and repossession data for its members across the UK.

It is the first time that the group has published this data on a quarterly basis.

The CML said it had decided to release the figures every three months to bring it in line with the Ministry of Justice figures.

Shelter chief executive Adam Sampson warned of "severe shocks to come" with increases in unemployment, negative equity and defaulting on buy-to-let mortgages.

"Lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise," he said.

The Royal Institution of Chartered Surveyors (RICS) said the CML figure suggested the worsening economic climate was already being felt in the property market.

Simon Rubinsohn, RICS chief economist, added: "With unemployment set to rise sharply as the recession bites, it is inevitable that both indicators will rise further in 2009.

"The full impact may, however, be mitigated to some extent by the actions of lenders and the Government, both of whom are devising strategies to limit the fall-out from the current crisis."

He said a likely cut in interest rates to a low of 1.5% would cut borrowing rates and "ease the pain" of financing existing mortgages.

"Ominously, however, the buy-to-let market is now accounting for an increasing share of mortgage arrears," he said.

"The latest RICS survey of the residential lettings market shows rents are now declining which, if persistent, could exacerbate the pain in this sector."

Shadow housing minister Grant Shapps said: "These worrying figures show that far more needs to be done to stop families being thrown on to the streets.

"A toxic combination of a high cost of living, combined with an economy built on debt means that record numbers of people now face losing their family home.

"Having been partly responsible for the mess, Prime Minister Brown now seems to have a spring in his step, but his own move to alter Charging Orders will put even more homes at risk of repossession.

"The Prime Minister is giving new powers to bailiffs to use force to break down the doors of family homes to collect small debts such as unpaid TV licence fees or parking tickets. Some of the increase in repossessions will therefore be down to Brown the bailiff knocking on your door.

"It's time to stand up for families in these difficult economic times, but Brown only seems interested in trying to help some of the most unscrupulous lenders."

Liberal Democrat Treasury spokesman Vince Cable said: "It is clear that in the face of this recession more and more families are simply unable to make ends meet.

"Even with falling food and energy prices, some families have already been stretched to breaking point by colossal debts and the high cost of borrowing.

"The steep rise in the number of people in arrears makes it highly likely that a flood of repossessions is just around the corner.

"This is very much a nationwide problem, with both the North and South being hit hard by similar rises in repossessions.

"There is a real danger that Government proposals to prevent repossessions have not gone far enough. Following this month's landmark ruling there is a danger that some unscrupulous lenders will simply bypass the courts.

He added: "We must ensure that people's homes are only ever repossessed as an absolute last resort."

Downing Street declined to comment on a report in The Sun suggesting that Chancellor Alistair Darling will use Monday's Pre-Budget Report to announce a three-month period of grace for home-owners who miss mortgage payments before lenders can start repossession proceedings.

Prime Minister Gordon Brown told reporters at a regular daily briefing: "We are clearly determined to work to do whatever we can do in order to help people who are concerned and are affected by house repossessions.

"But in relation to any specific announcements, it's probably best to wait for the PBR."

Ms Beckett later said today's figures were "worrying" and a "matter for considerable concern" but were in line with predictions made earlier this year.

"It's very sad but it isn't altogether a surprise," she told BBC Radio 4's The World At One.

The Housing Minister stressed the importance of a "partnership" approach between Government and mortgage lenders and said both parties were looking at ways to help struggling homeowners.

But she said it is vital that those finding it hard to pay their mortgages come forward to ask for help.

"The absolute key to all of it - people cannot access any advice, any help, any support if they don't tell anybody," Ms Beckett said.

"It is key. The lenders can't help, the banks can't help, no one can help unless they know that someone is in trouble and wants to find a way out of that trouble."

Prime Minister Gordon Brown said today that he was urging banks to help people keep their homes when they get into difficulties.

Instructions have been given to courts to ensure that alternatives are considered before repossession orders are issued, he said.

And banks were being told it is in their own interests to allow mortgage-holders to retain possession of their homes until their value rises once again.

The Prime Minister said the Government was determined to support people facing difficulties in paying their mortgages, pointing to changes coming into effect on January 1 which will provide state help with repayments after 13 weeks of unemployment.

Mr Brown spoke to voters who are facing the threat of losing their homes during an interview on BBC Radio 2's Jeremy Vine Show.

He told one caller: "I am telling the banks that it is a bad thing for them to move to repossessions because people are in temporarily difficult circumstances, but they have got an asset which in time will grow in value.

"People, even if they are made unemployed for a short period of time, will be able to get jobs back, because we are building an economy that is going to be stronger in the future."

Talking to a caller who said his sister was under threat of repossession, Mr Brown said: "I am determined that the rules are properly followed and there has been an order issued to the courts by the judges that all proper procedures have to be followed.

"So, for example, a mortgage could be renegotiated, a mortgage could be spread over a longer period of time, some help can be given in periods of unemployment or changes in family circumstances."