Page last updated at 12:26 GMT, Tuesday, 28 October 2008

Repossession number 'up by 71%'

Pile of sale signs
This is only the second time the FSA has released this type of data

The number of people losing their homes after failing to meet their mortgage repayments has climbed sharply, says the UK's financial watchdog.

The number of repossessions in the second quarter of the year was 11,054, up 71% compared with a year earlier.

The Financial Services Authority also said the number of people struggling to clear home loan arrears had risen.

Meanwhile, figures from the Land Registry showed house prices in England and Wales have fallen again.

This comes after the Bank of England predicted more woe for homeowners.

Rising concern

The FSA said the number of repossessions had been rising since September last year.

11,054: Number of UK homes repossessed in April to June (FSA)
8%: Annual fall in England and Wales house prices (Land Registry)
1.2 million: Number of UK households expected to end up in negative equity (Bank of England)

The number of people who have fallen behind with their mortgage repayments for at least three months had also been rising steadily for more than a year, the watchdog added. Cases were up 16% on a year ago.

Not all of these will lead to repossessions, and homeowners are urged to contact their lender as soon as they find themselves struggling to make repayments.

This is the second time that the FSA has released figures of this kind, which are based on data from 300 regulated mortgage lenders and administrators.

It started collating the figures at the start of 2007.

The Council of Mortgage Lenders has estimated that 45,000 homes in the UK will be repossessed in 2008, up from 27,100 last year.

Housing market

The FSA data backs up other accounts of the state of the housing market, which indicate that the number of new home loans has dropped and banks are being more cautious about who to lend to.

Door key
House prices have dropped heavily in the past year

Gross lending fell by 26% in the second quarter of the year compared with a year earlier.

The FSA said that "significantly fewer" new loans had been given to people who could only offer a deposit of 10% of the value of the property. This was down from a peak of 15% of new lending in early 2007 to 10% this time.

Loans to borrowers with a chequered credit history represented 2.1% of new lending in April to July, compared with 3.4% a year earlier.

Separate figures released on Tuesday by the Land Registry show that house prices in England and Wales dropped by 2.2% in September.

That made the average home worth 168,814, down 8% on a year ago.

The annual decrease in house prices is accelerating. The biggest fall was in Wales (down 10.7%), and the smallest was in London (down 6.1%).

Negative equity

The Land Registry's figures come shortly after the Bank of England reported that UK house prices were showing a sharper decline than property values in the US.

The Bank's Financial Stability Report has estimated that 500,000 homeowners in the UK are in negative equity as a result of a 13% fall in UK property prices since their peak in October last year.

It predicted that this number would rise to 1.2 million - one in nine UK homeowners - if house prices dropped by another 15% over the coming months.

A Bank spokesman said this was only a "gauge" were house prices to fall further, but it would be more optimistic than some other predictions, which have suggested 2.5 million homeowners could face negative equity.

Negative equity is when mortgage debts exceed the value of the property. It is not a major problem unless the owner is looking to sell or remortgage, as the value of homes is expected to rise again over time.


Region Monthly change (%) Annual change (%) Average price
Yorks & Humber -1.2 -7.7 135,448
London -1.5 -6.1 328,927
North West -1.5 -6.3 129,166
West Midlands -1.8 -7.4 142,906
East -1.9 -8.4 176,815
South West -2.0 -9.7 178,322
South East -2.1 -7.7 209,785
North East -2.2 -8.3 118,178
East Midlands -2.7 -9.9 133,175
Wales -5.5 -10.7 126,530

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