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Repossessions jumped by 12% in the third quarter of the year as increasing numbers of homeowners struggled to make their mortgage repayments, figures showed today.
A total of 11,300 homes were repossessed between July and September, compared with 10,100 in the second quarter of the year, the Council of Mortgage Lenders (CML) said.
This is the first time the CML has published quarterly statistics so no year-on-year comparison is available. However, it is clear that repossessions are rising as higher living costs and growing unemployment hit consumers.
Last year, 26,200 properties were taken into possession by lenders - so far this year the figure stands at 30,200.
The CML said 168,000 mortgage borrowers were now at least three months in arrears on repayments - 8% higher than at the end of June when 156,000 people had fallen that far behind on their loans.
It said by the end of the year it expected the number of households at least three months in arrears to exceed its previous forecast of 170,000.
However, the CML has not readjusted its forecast for repossessions and is predicting a total of 45,000 this year - a 50% increase on last year's figure.
Separate figures for the buy-to-let market show a sharp rise in the incidence of landlords falling behind on their loans.
The CML said such loans had in the past been less susceptible to problems, but falling rents and over-supply in some areas had made it harder for borrowers to meet their commitments.
Although the 900 buy-to-let properties repossessed in the third quarter was no higher than in the first two quarters, 1.58% of all buy-to-let loans was at least three month in arrears compared with 1.44% of all mortgages.
Given the rising number of arrears cases among landlords, the CML said it was likely repossession rates would grow.
Repossession proceedings
Figures from the Ministry of Justice, also published today, show the number of repossession proceedings started against borrowers has also increased.
Seasonally adjusted figures show that between July and September, 38,511 mortgage possession claims were lodged in the courts - 1% down on the second quarter but 9% higher than the previous year. A possession claim is the first step a lender takes toward repossessing a property. Not all claims necessarily end in repossession.
Over the same period the courts granted 29,516 possession orders against homeowners - 3% more than in the second quarter and 24% more than in the same period last year.
Of those granted over the three months, 47% were suspended to allow the borrower time to repay some of the arrears and get back on track.
Despite the increase in orders sought by lenders, the CML's director general, Michael Coogan, said banks and building societies were committed to ensuring repossession was "only ever a last resort". He called on the government to offer more support to struggling homeowners.
"Increased help with housing costs is needed for a wider range of borrowers facing unforeseen repayment difficulties where there would otherwise be little prospect of early improvement," he said.
"Next week's pre-budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited."
Coogan added: "We and our members are continuing to look at every possible way of minimising repossessions, consistent with considerations of the borrower's financial prospects."
Tougher times ahead
The housing minister, Margaret Beckett, said the government was determined to offer households as much help as possible "in the tougher times ahead".
She said the government had taken several steps to protect the most vulnerable families from repossession, citing the recent court protocol to make sure lenders are exploring all avenues before making a claim in the courts, the £200m mortgage rescue scheme, and the introduction of more free legal representation in county courts.
"Lenders need to be doing everything they can to help families facing difficulties," she said. "We are continuing to work closely with them to look at what more we can do and plan to make further announcements shortly."
Howard Archer, chief UK economist at IHS Global Insight, said there was more gloom ahead.
"The number of repossessions seems sure to rise substantially further over the final quarter of 2008 and, more especially, in 2009, however sympathetic lenders are.
"This will be the consequence of faster rising unemployment as recession takes an increasing toll, higher debt levels, very tight credit conditions and more and more people being trapped in negative equity."
He added: "While the sharp reduction in interest rates by the Bank of England earlier this month, the prospect of more rate cuts, and government measures to support the less well off in Monday's pre-budget report will obviously be of some help, it seems certain to be insufficient to save an increasing number of people from losing their houses."
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