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Last Updated: Friday, 3 November 2006, 16:03 GMT
Mortgage repossession orders rise
Houses for sale
The figures suggest homeowners are under more financial strain
Mortgage repossession orders made by courts in England and Wales are at a five-year high, indicating that more homeowners are under financial strain.

More than 24,000 orders were approved in the past three months, a 22% increase on the same period in 2005.

The number of properties actually repossessed also hit a five-year high earlier this year.

Experts warned the trend of rising repossession orders would continue with interest rates likely to rise soon.

Repossession trend

The Bank of England is widely expected to raise rates by a quarter-point to 5% when it meets on Thursday, although Governor Mervyn King has insisted that this should not taken for granted.

Hawkish economists believe rates may have to rise to as much as 6% next year to ensure inflation is kept in check.

The likely increase in interest rates this month makes it all but certain that the numbers entering the repossession process will continue to rise
David Stubbs, Royal Institute of Chartered Surveyors

The number of repossession claims issued - the moment when a claimant begins a repossession action - have risen steadily since 2004.

Repossession orders made - when a court permits a claimant to apply for an eviction warrant - have also been rising for more than two years.

The figures do not represent the number of properties actually repossessed.

Nearly half of those repossession orders made in the most recent period were suspended to enable the defendant to comply, if they so chose.

Rates squeeze

But separate figures published earlier this year showed that 8,140 properties were repossessed in the first half of the year - the highest figure since early 2001.

August's quarter-point rise in the cost of borrowing, which took rates to 4.75%, has made life more difficult for many homeowners, particularly those with variable-rate mortgages.

Experts fear the situation could get worse.

"The figures clearly indicate the rising trend of repossessions witnessed since the second half of 2004 has further to go," said David Stubbs, senior economist at the Royal Institute of Chartered Surveyors.

"The likely increase in interest rates this month, plus the possibility of more monetary tightening in 2007, make it all but certain that the numbers entering the repossession process will continue to rise."

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