Home repossessions rise by 3%

Published 16th Dec 2009

FSA figures show the number of new repossession cases rose to 13,987 in the third quarter of 2009


The number of repossessions orders taken out by mortgage lenders rose by 3% during the third quarter of the year to 13,987, figures from the City watchdog showed today.

Despite the increase, the Financial Services Authority (FSA) said the number was "much in line" with the average for the year as a whole and 6% below the figure for the first quarter of the year. The drop is likely to have been driven by interest rate cuts at the start of the year, which made mortgages more affordable, and increased government help for struggling borrowers.

The FSA said the number of borrowers who had fallen into mortgage arrears of more than 1.5% of their outstanding loan had fallen for the third successive quarter, and at 46,000 was down 10% on the three months between April and June and 30% below the peak in the last three months of 2008.

The total number of mortgages in arrears stood at 395,000 by the end of September, a fall of 7,000 (1.8%) on the second quarter – the first time the number has dropped in more than two years. The percentage of the total mortgage book in arrears remained static, at 3.61%.

People who were in arrears managed to pay an average of 48.5% of the payment that was due during the third quarter, up from about 40.6% in the second half of 2008.

The FSA figures are broadly in line with statistics published by the Council of Mortgage Lenders (CML) in November, which also showed a 3% rise in repossessions during the third quarter to 11,700.

The number of people who were behind with mortgage repayments also dropped to 194,600, although the CML figures only include those who were in arrears of at least 2.5% of their outstanding mortgage.

The difference between the two sets of repossession figures is due to the fact that the FSA data includes all lenders, including those offering second charge mortgages, while the CML only publishes figures on first charge loans advanced by its members.

Earlier today a report published by charities including Shelter and Citizens Advice suggested some lenders were ignoring the government's repossession protocol, which was designed to help more people stay in their homes.

Responding to the FSA's figures, Shelter's director of policy and campaigns, Kay Boycott, said the fall reflected the fact that schemes to help struggling homeowners were making a difference.

Boycott said in eight out of 10 cases where people got free legal advice through court desk schemes they had avoided immediate repossession, but said that more still needed to be done for borrowers.

"Job loss is the most common cause of mortgage arrears and with 2,000 people losing their jobs every day we still have work to do to ensure that we save as many people as possible from repossession," she said.

"The only way to close these gaps is to make sure all lenders fully comply with the pre-action protocol. We also need a fundamental review of the private and state safety nets, and more flexible powers for courts to help borrowers stay in their homes."

Outstanding mortgage loans
The FSA's report also includes figures for the wider mortgage market. It shows that by the end of the third quarter the total value of outstanding loans stood at £1.2tn, 1% more than the same period last year.

The value of new loans granted to borrowers over the three months totalled £40bn, 20% higher than in the second quarter of the year but lower than the £61bn advanced in the third quarter of 2008.

Fewer than 2% of those loans were for more than 90% of a property's value, compared with almost 14% in the second quarter of 2007 when the housing market was at its peak.

Source: ' Guardian '

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