New research has predicted that 5 million households will be in negative equity by the end of the year, with already heavily indebted first time buyers likely to be the worst hit.
A committee of MPs have said that mortgage lenders who pursue repossession too quickly should face sanctions for breaking the guidelines of the Financial Services Authority (FSA), who insist that seizing a home should be the last resort in cases of mortgage arrears.
The rise in the number of repossessions last year to 40,000 implies, say the MPs on the Commons communities and local government committee, that lenders aren’t taking this guideline to heart and are rushing into repossession proceedings before other options have been fully explored.
New figures from the Council of Mortgage Lenders (CML) report that 40,000 properties were repossessed in 2008, the highest figure since the dark days of the early 1990s, when 75k homes were lost in 1991. The figure represents a 55% jump on 2007 figures, but the bad news doesn’t end here - many forecasts say that 2009 will see the repossession total almost double.
By the end of 2008, around 182,000 mortgages were in significant arrears - behind by 2.5% of the loan amount or more - representing a 50% rise over the course of the year.
The Office of Fair Trading has ordered 16 ’sell and rent back’ companies to substantiate the claims they make in advertisements. If there is any discovery of ‘unfair and misleading’ claims, then the firms could be open to prosecution.
The Council of Mortgage Lenders (CML) have released new figures showing a dramatic rise in the rate of home repossession, with 48% more properties taken into repossession in the first half of the year compared to the same period in 2007. In total, 18,900 homes were seized.
The number of mortgage payers in arrears was also up sharply, rising 29% to 155,600.
While the CML acknowledged that the figures were likely to continue to get worse, a spokesperson stressed that the number of homeowners facing real problems was still small when compared to the 11.75 million open mortgages in the UK, and that the hardest hit mortgage payers were those with sub-prime deals which have become more expensive and harder to obtain because of the credit crunch.
A new report predicts that 1.7m mortgage payers could face negative equity within the next year, as house prices continue to slide.
Credit ratings agency Standard & Poor (S&P) predict that prices will fall a further 17% over the next year, resulting in 14% of UK mortgage holders finding that their home was worth less than their outstanding mortgage balance.
The current number of households in negative equity is around 70,000 or around 0.7% of homeowners.
New figures from the Council of Mortgage lenders make uneasy reading for mortgage payers struggling to make ends meet, with a 21% rise in house repossessions last year compared to 2006. In all, 27,100 homes were seized, up from 22,400 the previous year.
The number of home repossession actions has risen by 22% compared to last year, according to new figures released by the government. The report also shows a rise of 15% between June and October compared to the previous quarter.