Page last updated at 11:00 GMT, Friday, 15 August 2008 12:00 UK

Repossession orders climb by 24%

Door key
Rising household bills are putting homeowners under pressure

The number of homeowners in England and Wales facing repossession after falling behind on their mortgages has risen.

The Ministry of Justice said 28,658 orders were made by the courts in England and Wales in the second quarter of 2008.

That was up 24% on the same period in 2007 and 4% higher than the first quarter of 2008.

The figures come a week after lenders' data for actual repossessions across the UK also showed a leap in numbers.

Losing a home

Repossession orders come early in the process and so do not always end with somebody losing their home.

Homeowners facing repossession must not bury their heads in the sand, a judge says.

It is when a court grants an order for the possession of a home, but is sometimes abandoned if a repayment deal can be struck between mortgage lender and borrower.

Mortgage possession claims - the earlier first stage of the repossession process - grew by 17% in the second three months of 2008 compared with the same period a year earlier.

There were 39,078 claims, which showed no change on the first three months of the year.

The credit crunch has led to more expensive mortgages which people have been struggling to pay as other household costs rise.

But the data shows that the numbers have not been accelerating at a significant rate throughout 2008.

Chasing arrears

The Ministry of Justice said that the number of orders increased the most in the Midlands (up 43%) and the least in London (up 12%).

Houses
Some lenders are chasing arrears aggressively, the regulator says

Last week, the Council of Mortgage Lenders (CML) said that the number of actual repossessions across the UK rose to 18,900 in the first six months of the year - up 48% on the same period of 2007.

Housing charity Shelter said lenders were "still using repossession as the first rather than last resort", with the charity reporting a 55% rise in the past six months of people coming to the charity for help.

"Every day Shelter is seeing more and more ordinary hardworking people who are terrified of losing their homes," said chief executive Adam Sampson.

"They are being punished by rising household bills, escalating fuel charges and food prices that are going through the roof."

The Financial Services Authority recently suggested that there was evidence of specialist lenders being aggressive in their repossession policies as the squeeze on finances continued.

But the CML said this unfairly tarnished the whole industry. The CML's Bernard Clarke told the BBC that the number of mortgage possession claims - the first stage of the process - was five-times the number of actual repossessions.

With house prices falling, he said that it could be in both the lender's and borrower's interests to deal with the situation quickly before more equity was lost on the property.

Payment options

However, the CML is still predicting that repossessions will eventually rise to 45,000 this year.

We are making sure the right advice and support is available for the minority of borrowers who may need it at the moment
Caroline Flint, Housing minister

It wants people to contact their mortgage lender as soon as possible if they find themselves in difficulty making repayments.

"There are a range of options your lender can consider to help reduce or reschedule your payments for a period of time while you get back on your feet," said CML director general Michael Coogan.

David Harker, chief executive of Citizens Advice, agreed that the majority of people could come to a "workable agreement" with their mortgage lender that would prevent them losing their home.

Housing Minister Caroline Flint said: "While we are not seeing repossessions on the same scale as the early 1990s, we are making sure the right advice and support is available for the minority of borrowers who may need it at the moment because of global economic pressures."

Philip Hammond, shadow chief secretary to the Treasury, said: "Lenders must now act responsibly - even if our prime minister has not done so - to minimise the number of people losing their homes."

Liberal Democrat Treasury spokesman Vince Cable said: "The level of growth of repossession orders suggests that we are on track for a repossession crisis very similar to the early 1990s.

"It is absolutely vital that the government should intervene and require a proper code of conduct to be implemented by mortgage lenders."

MORTGAGE POSSESSION ORDERS MADE - 2008 Q2

Region Total % change
London 4,052 +12
Midlands 6,220 +43
North East 4,590 +24
North West 5,073 +38
South East 5,630 +30
South West 2,668 +34
Wales 1,987 +39




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