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Last Updated: Wednesday, 26 October 2005, 19:26 GMT 20:26 UK
More homeowners in debt trouble
House keys
Concerns over debt levels are rising
Mortgage repossession orders during the past three months in England and Wales were up 66% on a year ago to nearly 20,000, official figures have shown.

Repossession orders have been on the increase since early 2004.

The figures show the total number of homeowners being taken to court by lenders pursuing mortgage debt rose 55% to nearly 30,000.

The Department for Constitutional Affairs figures will add to concerns about debt and the housing market.

"The increase in mortgage possessions fits with the slowdown in house price inflation," Alan Clarke, UK economist at BNP Paribas, said.

"The conclusion is there are still signs of financial stress among homeowners," he added.

Lower than average

Graph

In July, the Council for Mortgage Lenders (CML) said there were 4,640 homes repossessed during the first half of 2005 compared with 3,070 for the previous six months.

Lenders have blamed rising repossessions on five interest rate rises between November 2003 and August 2004.

In August this year, UK interest rates were cut by the Bank of England's Monetary Policy Committee from 4.75% to 4.5%.

The CML has predicted that more than 10,000 homes will be repossessed by the end of the year.

However, repossessions are still set to be much lower than the long-term average of 30,000, or the peak of 70,000 a year recorded during the early 1990s property market crash.

Enforcement

It does not automatically follow that repossession orders, as recorded by the Department for Constitutional Affairs, result in actual repossession.

Generally, the number of court repossession orders is far higher than actual repossessions because often the borrower agrees to pay or a deal is made so the order is not enforced.

A lender may also obtain more than one order for each property if a previous order has lapsed.


What do you think about these figures? Have you experienced home repossession? Do you know anyone who has? What should be done about this problem?

Your comments:

My wife and I live in a small two-bed starter property and we need to move to a lager property due to a new arrival this year, we cannot move up the property ladder because of the massive price difference between the two and three bedroom houses. We are hoping for a housing market crash so we can move on.
Steve, Boston

Perhaps the Government should consider setting a cap on rents for certain areas of the country. This would discourage greedy landlords buying up multiple properties and then charging extortionate rents for those that can least afford it. We need realistic rents in this country so that people have a real choice on whether to buy or rent. Greedy landlords aren't helping anyone but themselves and the loan companies.
Paul McDonald, Welwyn Garden City, UK

As a young teacher (married with two small children) buying a house big enough for a family of four, is completely out of the question. Even in years to come my wages will not be sufficient to cover a mortgage. In fact currently we qualify for some housing benefit for our two bed house... I can not even afford to rent a bigger place, whilst earning a reasonable wage! We are now planning to immigrate as soon as possible to enable us the live in a house big enough for all of us! No easy choice¿ the thought of leaving our home country makes us all very sad...
Kai, Derby, Derbyshire

It makes me laugh so many people out there looking to blame someone else rather than taking responsibility of their own actions. I agree there should be some sort of 'cap' on the amount borrowed which would have helped control house prices / debt over the years but there wasn't. Ultimately the responsibility lies with the person signing the contract; a simple question of can we actually afford this on our income needs to be asked. As for the guy who said the lender should be liable for any amounts borrowed over 3 x salary....what a joke, maybe he should learn to say no!
Ian, Kent

With my wife we are about to complete on our first house. If it wasn't for the help of family members who made it possible for us to have a 30% deposit, we would have never made it. We are higher rate tax payers and the repayments will be a bit higher than the rent, but manageable. I think people need to take more responsibility for their actions and stop blaming others (banks, government, advisers) We saved as much as we could for four years and now we can get on the ladder.
Juan C, Surrey, UK

First and foremost, people must take responsibility for their own actions rather than blame others, which seem ever more the case. Property prices have gone up as much as they have because we, the purchasers, are willing to pay. Like it or not, as new building land in the UK becomes rarer, property can only get more expensive. If people wish to own property they need to work for it, with both partners working full time, and save for it, cutting out the unnecessary luxuries. If that's too much too ask, its not the governments fault.
Max, Bury St Edmunds, Suffolk

House prices are at unsustainable levels due to a combination of cheap debt, lax lending, and people's naivety thinking markets only go up. Buy-to-let investors have kept the market propped up until now, they are fast disappearing. Government is scared of a house crash hence their ill advised SIPP legislation attempting to prop up the creaking edifice a while longer- just delaying the inevitable.
Andy, Richmond, Surrey

I left England and bought a house in Germany. It is an accepted fact here that as your house becomes older the price is likely to depreciate or hopefully retain the same value. Of course the same city centre prices apply here as well but the market as a whole is more stable and government tax breaks still exist.
Mike James, Langenfeld, Germany

I think the real problem stems from how easy it is to re-mortgage your home. We did it in the past and we paid off credit cards, etc. and had a really good holiday that year. We didn't address the real issue until recently, that we weren't using our credit wisely. We straightened ourselves out and life is much better now. I truly don't think this is about first time mortgages but what happens when a remortgage kicks in.
Val, USA

I have saved very hard and had some very well paid jobs (above the national average) yet I am not able to purchase a property unless I moved out of London. Then I have the inconvenience of a long journey and all the risks that presents compounded by high transport costs. It is very difficult as a single person to get on the property ladder relying on a salary only. I have a good deposit but alas it is still inadequate unless I double my salary and take out a 30 year plus loan.
Jo, London

Most other countries have borrowed to prop up the economy. This government has preferred to encourage individuals to borrow instead, to fuel consumer spending and the economy. As the consumer credit levels reach their maximum, the harsh reality of this error will effect not just the country but also all businesses and individuals. This is going to get nastier yet.
Graham Found, Banwell, North Somerset

House prices are ludicrously high, and this will not improve when the government gives tax breaks for wealthy people to put homes into their pension schemes at the expense of normal people who just want a home. However, people do also have elevated expectations for their lifestyles - designer-label clothes and cars and so on - which can't help them to reduce their debt. It's hard to apportion blame in such a silly situation but the government needs to do something (if only to abandon its pension tax-break plan) if we are not to see a lot of families without proper homes in the future.
David, Surrey

I earn just over 40,000 GBP a year, but cannot afford to buy a house. Because of earlier financial difficulties we didn't buy a house when we should have, and now have 2 kids. A three bedroom house, even in a poor area in town, is 150,000 pounds which is more than three and half times my income and a lot of money to repay each month as a mortgage. It seems crazy that property prices have reached the point where people paying the higher rate of tax cannot afford to get on the property ladder.
Ian Matthews, Shrewsbury, UK

I work for a financial institution that takes responsible lending seriously. Unfortunately, too many institutions are so driven by their own sales/growth targets and the problems faced by increasing house prices that they have relaxed their lending policies to enable people to borrow far more than they would have been able to over latter years. A number of people probably haven't worked out how much of an increase in monthly commitments a 1%, 2% hike in base rate makes. Ultimately, the borrower must take full responsibility for their commitment, but I believe that the lenders have a duty to lend responsibly based on their income.
Gareth, Swansea

I am an independent financial adviser and I'll accept that it is difficult for first time buyers to get on the property ladder. However, I don't often see first time buyers sacrificing any luxuries or modifying their lifestyles to save for their deposit. Is it peer pressure, lack of guidance from parents or a general lack of understanding of debt that makes this the case? I don't know! In general people need to be more responsible for their own actions and not blame the banks, the government or the advisers for what is often a self generated problem.
Neil Burton, Tunbridge Wells, Kent

I had 14 different credit cards three years ago totalling £114,000! Obviously I couldn't cope with the repayments and got a Trust Deed. This helped to get my finances back in order and three years later I am much more credit savvy. But, the finance companies and banks etc keep offering more and more credit. They have to stop or be stopped by government legislation. No-one should have more debt than, say, three times their earnings (including mortgage ). If someone lends a person over and above this level, then the lender should be liable! The number of people who are really struggling is way above the estimates from the government who don't want to admit to the problem.
Pete, Hamilton, Scotland

I find it laughable that the lenders blame interest rate rises.
Andy, Beds
I find it laughable that the lenders blame interest rate rises. They know better than anybody that 4.75% is still a historically low rate. Surely anybody taking out a mortgage should ensure they can afford at least a 2% rise in interest rates. I think we all know that high house prices are the problem here but the housing industry dare not admit it as their profits are at stake.
Andy, Beds

I think people should start to take responsibility for there own actions. No estate agent or bank person was there holding a gun to there head forcing them to take a mortgage that they could not pay for. These people get themselves in to debt buy maxing out all available credit then when the interest goes up they can no longer service the debt and are all surprised by this.
Christopher, Canada

Thank goodness that we are beginning to face up to our financial responsibilities. My son and his partner were able to borrow a horrific sum of money to buy a new house and are struggling to make ends meet. How many others are in a similar position but are simply too embarrassed to admit it?
Betty Middleton, Lancaster

We have become too focused on home ownership. I would be content to rent if the rent I paid was affordable (but I would be hard pushed to find as nice a home to live in the in the private rented sector for the same amount my mortgage costs me) and if I felt I could stay there with some security and a landlord that kept the house up to a high standard. But that's not the way we are set up to live in the UK.
Katy, Brighton

I left England for Canada in 1999. This year I moved to Turkey. It is a sad and unfortunate fact that I will unlikely to be able to return to my homeland, for the simple reason that I can't afford a roof over my head. House prices are a millstone around the necks of the British people.
Peter Lee, Ankara, Turkey

Ultimately it's the customers responsibility to make sure they are not borrowing more than they can afford
Ifthir Ahmed-Miah, Newport, UK
It's all to easy to point the finger at financial advisers and the banks, the financial services industry is one of the most highly regulated industries in this country. Financial advisers are there to advise but ultimately it's the customers responsibility to make sure they are not borrowing more than they can afford. The government are also to blame for creating the environment for property prices to be out of reach of most First Time Buyers.
Ifthir Ahmed-Miah, Newport, UK

I work for an advice agency. Debt is on the increase make no mistake. However, there are priority and non-priority debts. Your mortgage gets paid pretty much above all else if you don't want to lose your property. Generally, problems are caused by a catalyst such as relationship breakdown/injury/unemployment etc. Payment protection insurance is, in my opinion worthless. So what are the options? Repossession!
Nick, Hackney

My house was repossessed a month ago. At the height of the property boom in early 2004 I splashed out far more than I could actually afford on a large property with the intention of selling it on at a profit. It wasn't long after that the property slowdown started but I kept hold of the property and financed the mortgage by getting myself further into debt, I was certain that the housing market would take off again and I would realise my gains. Following two years of quite harsh housing market drops in the south west I have been forced to admit defeat.

I blame myself for everything that has happened but I also think there are a lot of companies around who like to put a rosy outlook on the housing market and try to make everyone think it will always go up (estate agents, surveyors, mortgage companies), they should take part of the blame for lying to the public.
Dan, Bristol

It's another sign that that the boom in house prices is over and set for a steep fall over the next few years, just like they always have done after previous such unsustainable rises. What's more worrying this time around however is that interest rates are low, at the moment, but because of high personal debt and high cost of living, people are starting to struggle already. High prices do no-one any good. Even Estate agents are talking the market down - they need sales at any price, not high prices preventing sales.
Andrew, Lewes

Can we stop blaming always the estate agents and banks? I appreciate that they do play a big role in this mess, but why can people, for once, look at their own pockets and stop being so naive? I have finally managed to buy a property at the top of the market price, because I was fed up to pay rent and the flat I was living in was too small. I have stretched my finances as much as possible but the last thing I want is for my house to be repossessed. I live on potatoes and beans before that happens!
Tamara, Aylesbury

It is far too easy to borrow vast amounts of money
Andy New, Norwich
I work in the mortgage/financial industry and it is far too easy to borrow vast amounts of money. People can re-mortgage up to the value of potentially over inflated property prices and buy cars, go on holidays etc. This puts such a strain on individual's finances when rates change, but companies continually encourage it with promotions, low start rates and cash back. A lot of the responsibility is down to the customer to limit their borrowing and not get caught up in the 'live for today' or the mortgage marketing ploy. This also applies to the credit card and loan companies.
Andy New, Norwich, UK

I agree with Mike. The main cause lies in the LTV and imprudent leading by banks etc. Sales targets and competition have taken over from concerns about ability to service debt in the long term.
John, Kingston upon Thames, Surrey

It's nothing more than another sign of a greedy society that thinks it's acceptable to spend beyond its means. I wonder how many people who have had their homes repossessed also have unpaid credit card bills, personal loans, car finance etc.
Neil Wallace, Sheffield

I personally think that it's the mortgage agent who should be held responsible for property repossession. I know few people who have managed to borrow more then they can actually repay! Just for the sake of being on the property ladder. There are agents who can manipulate data in order to secure you the mortgage to buy your dream home. There must a law to catch these people.
Nehal, London

People are obsessed by how much their house is worth. How much money they have "made". The amount of friends I know who no longer buy houses because they would be a nice home but because it can make money. This is just pushing house prices and mortgage repayments out of control leading to this problem. There are no winners apart from the banks. I wish we could realise this and bring prices down to the level they should be.
Alex, Bromley

It goes to show that only property dealers and estate agents and banks benefit from crazy house prices. Normal people who just want somewhere to live, especially young people and young families can no longer afford to buy a house and those who's houses have gone up in value do not benefit because what can they do, sell up? And live where?
Leigh Porter, Fulham UK

The lenders tend to blame the increase in repossessions on increases in interest rates. However, if they had been more prudent in the amount that was borrowed many of these cases would not have arisen. Lenders have been too keen to provide high LTVs and income multiples.
Mike, Reading



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