Home repossessions rise 15%, CML says

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A total of 9,100 homes were repossessed in the UK in the first three months of 2011, up 15% on the previous quarter, lenders say.

The figure was 10% lower than the same period the previous year and in line with the quarterly average of 2010, the Council of Mortgage Lenders (CML) said.

However, the number of householders getting behind on mortgage payments has fallen slightly since December.

The CML warned that households would be financially stretched for some time.

The group has predicted that a total of 40,000 people will lose their homes this year, up from 36,300 in 2010.

Missing payments

Repossessions were at a relatively low level at the end of 2010, but the latest quarterly figures show the first three-month on three-month rise since the third quarter of 2009.

But while more homes were repossessed, arrears levels fell during the same period.

At the end of March, the number of mortgages with arrears equivalent to 2.5% or more of the outstanding balance stood at 166,900, which was 1.47% of all loans.

This was less than the 170,000, or 1.5%, of loans in arrears at the end of December 2010, and 11% lower than the 187,300 home loans in arrears, 1.65% of loans, a year earlier.

Michael Coogan, CML director general, said that lenders were giving householders the chance to get back on track with mortgage payments, rather than repossessing homes quickly.

However, a squeeze on incomes could make things more difficult for homeowners.

"Looking ahead, the financial position of many households is likely to be stretched for some while, and some will inevitably find themselves in difficulty," Mr Coogan said.

"Lenders have a range of options to nurse borrowers through temporary problems."

He added that the regulator of the mortgage market had alerted lenders to the fact that being too generous with borrowers getting behind on payments could cause problems, as could repossessing homes quickly without giving householders the chance to overcome difficulties.

Interest rates

Commentators have been debating if and when the Bank rate might rise from its record low of 0.5%.

Image caption Some people are finding it tough to sell their homes when they need to, advisers say

This would have an impact on the costs of mortgages. However, a rate rise of a quarter percentage point, taking the Bank rate to 0.75%, would not push a host of homebuyers into arrears, a CML spokeswoman said.

Despite this, falling house prices and inactivity in the market could cause problems for some families facing financial difficulties, one adviser said.

"The continued decline of house prices since March 2010 means that there is an ever-increasing stock of houses appearing on a stagnant housing market. Therefore, for individuals in debt and with arrears, selling their property quickly is far from certain," said Bev Budsworth, managing director of The Debt Advisor.

Other figures published on Thursday by the Ministry of Justice showed that the number of households in the early stages of the repossession process had remained relatively stable.

Repossession claims issued in courts in England and Wales rose for the third consecutive quarter during the first three months of 2011 to 20,034, on a seasonally-adjusted basis. This was 3% higher than for the previous quarter and 8% higher than during the same period the previous year.

These led to 14,568 repossession orders being made, unchanged from the previous quarter and 2% up on a year earlier. Around 48% of the orders were suspended.

The north-east and north-west of England had both the highest number and ratio of repossession claims during the first three months of the year.

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