Page last updated at 13:18 GMT, Friday, 9 May 2008 14:18 UK

Repossession orders climb by 17%

Residential street in Newport, South Wales
The figures show households facing the early stages of repossession

The number of homeowners facing repossession orders after failing to keep up with mortgage payments is up, says the Ministry of Justice.

It says the number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008.

There were 27,530 orders made, up from 23,438 in the same period of 2007.

The credit crunch has led to more expensive repayments for new mortgages and a cut in the availability of deals.

Claims and orders

The number of mortgage possession claims - the first stage of the repossession process when homeowners are threatened with action - was also up.

There were 38,688 claims in the first three months of the year compared with 33,344 in the same period of 2007, a rise of 16%. This was also 7% higher than the final three months of 2007.

This stage comes before mortgage possession orders, when a court grants an order for possession of a home.

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

The Ministry of Justice figures show that the increase in the numbers of orders made was greatest in Wales - up 26% in the first three months of the year compared with the same period last year.

There was a 23% rise over the same period in the North West, and increases of 22% in the Midlands, 9% in the South East, 11% in the South West and 1% in the North East.

The BBC's economics editor Stephanie Flanders says that the number of repossession claims and orders has been rising sharply since 2005, partly because a long period of rising house prices has given lenders an interest in prodding homeowners to sell.

However, she adds that the great majority of these orders will not result in a house being repossessed, but clearly lenders are resorting to the courts more readily than they did in the past.

Tighter household budgets

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.

It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early 1990s
Housing minister Caroline Flint

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.

But Caroline Davey, from housing charity Shelter, told BBC News that banks and building societies were not doing enough to keep repossession figures down after pulling 100% mortgages from the market.

"I think the lenders have to take a real share of the responsibility here," she said.

"Those lenders have now retracted all of those mortgages. But what they haven't done is put their hands in their pockets to help the many thousands of people who are struggling, having taken on mortgages that they simply can't afford."

The number of people missing mortgage repayments is also partly due to the rise in household bills owing to the increasing price of food and fuel. The availability of credit has also been cut.

Help for homeowners

The figures come on the day 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.

Mortgage possession action graph

Housing Minister Caroline Flint said: "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."

But Shadow Housing Minister Grant Shapps said: "We called on the Government to provide greater debt advice more than 18 months ago and in the last three months David Cameron has urged mortgage lenders to warn borrowers when cheap rates were coming to an end.

"While we welcome the government belatedly getting on board, it is too little, too late and does nothing to help the 27,000 families who have already experienced repossession."

He said the Prime Minister should ditch Home Information Packs and axe stamp duty for first-time buyers on properties up to 250,000.

Liberal Democrat Treasury spokesman Vince Cable called on lenders to examine "all possible alternatives" before seeking a repossession order.

"Repossession claims have skyrocketed since last year. Many families could well end up losing their homes in the months ahead," he said.

"This Government must stop having vague discussions with mortgage lenders and instead clearly lay out the procedures which must be followed before a property can be repossessed."

Howard Archer, UK economist at Global Insight, said: "A significant number of people have had to stretch themselves to the absolute limit to get into the housing market in recent times as prices soared.

"This means that they are particularly vulnerable to any adverse shock to their finances."

Regional breakdown of possession orders and claims

Region Possession claims: Annual change since 2007 Q1 Possession orders: Annual change since 2007 Q1
London -1% -6%
Midlands 22% 22%
North East 20% 1%
North West 24% 23%
South East 13% 9%
South West 17% 11%
Wales 21% 26%

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