Mortgage repossession orders in England and Wales increased in the last three months by about 66 per cent as compared to the same period a year ago. In fact, they have been on the rise since the early part of 2004 as the housing market slowed down, the repossession rate is the highest since the early 1990's.
The number of homeowners being taken to court for pursuance of mortgage debt by lenders rose by 55%, to a figure of around 30,000.
The Council for Mortgage Lenders (CML), who met in July, said that 4,640 homes were repossessed during the first half of 2005 as against 3,070 in six month period prior to it. They have apportioned the blame on the on five interest rate hikes which took place between November 2003 and August 2004. The CML foresees more than 10,000 homes being repossessed by this year end. The figures add to the worries of the wellbeing of the housing market.
It, however, does not mean that all the repossession orders that are recorded by the Department for Constitutional Affairs are actually repossessed. This is because in some cases the borrower agrees to pay or a deal is negotiated between the lender and borrower so as to prevent the order from being enforced. Not taken into account is the fact that a lender may acquire more than one order per property if a prior order elapses. According to a spokeswoman of CML “repossession took place in only one in 2,500 mortgages".
Alan Clarke, UK economist at BNP Paribas, says: "The increase in mortgage possessions fits with the slowdown in house price inflation". Though the UK interest rates were cut by the Monetary Policy Committee of the Bank of England from 4.75% to 4.5%, “there are still signs of financial stress among homeowners,” according to Clarke.
Earlier, the repossessions peaked at 70,000 per year during early 1990s in the wake of a property market crash.
Posted
on : Thu, 27 Oct 2005 12:10 GMT | Debt News
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