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The government was accused yesterday of failing to protect struggling homeowners from aggressive lenders after the number of repossessions hit a nine-year high.
Opposition MPs and anti-poverty campaigners said tens of thousands of people would be needlessly ejected from their homes as the recession deepened unless ministers forced lenders and the courts to treat repossession as a last resort.
Tories and Liberal Democrats said figures from the Council of Mortgage Lenders (CML) suggested a grim 2009 that would bring misery for many families and delay any recovery in the housing market.
The CML said repossessions rose 12% in the third quarter of the year as increasing numbers of people struggled to make mortgage repayments. A total of 11,300 homes were repossessed between July and September, compared with 10,100 in the second quarter of the year, it said.
This is the first time the CML has published quarterly statistics, so no year-on-year comparison is available. It is clear that repossessions are rising. Last year, 26,200 properties were taken by lenders; so far this year the figure is 30,200.
The CML said 168,000 mortgage borrowers are now at least three months in arrears - 8% more than at the end of June when the figure was 156,000.
More than 45,000 repossessions are expected this year and several economists have forecast lenders taking the keys back on as many as 100,000 homes in 2009. The previous record was set in 1991 when the number of repossessions topped 75,000.
Senior figures in the banking industry argued that lenders were treating borrowers with "kid gloves" and only seeking repossession orders when all other options were exhausted. They pointed out that there are 11.82m mortgages in Britain - two million more than in 1992 - meaning there is a larger pool of borrowers vulnerable to missing repayments.
Other factors, such as the sharp rise over the last 10 years in the buy-to-let market, could exacerbate the trend and result in tenants losing their homes.
CML figures for the buy-to-let market revealed a sharp rise in the incidence of landlords falling behind on their loans.
The CML said 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 increase on the first two quarters, 1.58% of all buy-to-let loans were at least three months in arrears, compared with 1.44% of all mortgages.
CML director general Michael Coogan said lenders would "look at every possible way of minimising repossessions", which was why the forecast for 2008 remained unchanged. "The CML and lenders are absolutely committed to ensuring that repossession is only ever a last resort."
The government had taken "some helpful steps", but he urged ministers to go further. "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.
"Next week's pre-budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced."
The government has put in place a series of measures to help hard-pressed borrowers stay in their home. These include allowing them to sell their home and rent it back from a social landlord, or enter into a shared equity or shared ownership scheme on their property.
A pre-action protocol which came into force on Wednesday means courts must halt repossessions until all other options have been tried.
Lib Dem Treasury spokesman Vince Cable said that while these initiatives were welcome they excluded many homeowners. "It is clear that in the face of this recession more and more families are simply unable to make ends meet."
Shelter chief executive Adam Sampson warned of "severe shocks to come".
Facing repossession
Jassette Donaldson, 53, a check-out assistant from Leytonstone, east London, has fought for months to keep her three-bedroom house, which she bought in 2001.
She fell behind with her £1,230-a-month mortgage repayments in 2005 after being hit by a car. She took six months off work and then returned part-time. She was also supporting her daughter at university.
She went to court and made some repayments with help from her son but he can no longer help. Donaldson, who suffers from arthritis and sciatica, said: "Sometimes I can't walk as I'm in too much pain but my employers are threatening to sack me because I'm off work." She is seeking more time to sell her house. If that fails, her home will be repossessed and she and her daughter will be homeless. The house was valued at £300,000 but is on sale for £250,000.
Kathryn Hopkins
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