Repossessions set to hit 17 year high
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While repossession orders made during 2007 hit a 16-year high, the number of actual repossessions was lower because not all orders are enforced.
There were 27,100 actual repossessions in 2007, according to the CML, which had forecast 30,000 for the year.
Repossession orders usually aren’t enforced because the homeowner negotiates with the lender to resolve the problem. Alternatively, the court may suspend the order, as long as agreed payments continue to be made to the lender.
However, the council expects the number of repossessions to hit 45,000 this year, which would be the highest level since 1995, when the market was still recovering from the crash of the early 1990s.
A large number of repossession orders now may also mean a jump in repossessions later this year and in 2009.
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The CML says that homeowners who have taken out a mortgage worth 100% or more of their property's value over the past 18 months are particularly vulnerable to repossession, which leads to bankruptcy as well as losing your home.
“For some borrowers coming off fixed rates, higher payments will be affordable because their salaries have continued to go up,” CML director general Michael Coogan says.
“For others, the option of extending their mortgage term, switching from a repayment to an interest-only loan, or a short-term payment holiday may be an option if they have good payment histories.”
Lenders are under a general obligation to follow Financial Services Authority rules which require them to treat customers fairly and take possession only as the last resort, Coogan adds – but taking the matter into your own hands now and avoiding the possibility of repossession is the best approach.
