Page last updated at 07:06 GMT, Friday, 9 May 2008 08:06 UK

Help pledged over repossessions

Home being repossessed
Lenders predict a sharp rise in repossessions in 2008

The government has given details of plans aimed at helping homeowners who are struggling to pay their mortgages.

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

Figures published later are set to show more people facing the first stage of the repossession process.

However, experts said the current situation was a long way off the level of problems seen in the early 1990s.

Fresh help

On 22 April, the government announced that there would be more support for homeowners facing repossessions.

That pledge came after key figures from the mortgage industry met Chancellor Alistair Darling and Housing Minister Caroline Flint at 11 Downing Street.

The limited package of measures are aimed particularly at the million-plus borrowers whose fixed-rate deals come to an end this year.

Graphic of repossession figures

They are likely to face more expensive repayments and less availability of mortgage deals as a result of the credit squeeze.

In order to limit the impact, the government said a new debt advice service would be set up through the National Housing Advice Service.

At the same time, specialist training will be available for Citizen's Advice Service and local authority staff, and lenders will be encouraged to give early advice to borrowers in difficulty.

New arrangements will also be available to allow access for householders facing repossessions to free legal representation at all county courts in England.

The government are being urged to help those who are most irresponsible
Hugh, UK

"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.

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

"The fundamentals of the housing market remain strong with high employment, low interest rates, and long term demand for homes from first time buyers."

Rising numbers

Later on Friday, the Ministry of Justice will publish figures on the number of mortgage possession claims - the first stage of the repossession process - for the first three months of the year.

The data is expected to show a rise in claims owing to the effects of the credit crunch on household finances.

Caroline Flint
Housing Minister Caroline Flint has been working with mortgage lenders

Figures from the Ministry of Justice show mortgage possession claims in England and Wales by local authority and private mortgage lenders.

Most of these do not end with a property being repossessed, mainly because the borrower presents the court with a case for not proceeding or the lender comes to an arrangement with the borrower.

The number of actual repossessions, across the UK and by private lenders only, is shown in figures from the Council of Mortgage Lenders (CML) published twice a year.

The data for the first half of 2008 will be published in August. The CML predicts that there will be 45,000 repossessions in 2008, up from 27,100 in the previous year.

The CML says there are 11.8 million outstanding mortgages in the UK.

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