The number of people losing their homes because they are unable to keep up with payments has risen sharply, with a 71% increase in possessions since last year.
Figures from the Financial Services Authority (FSA) show that although the number of people missing payments for the first time has remained consistent since early 2007, more homeowners are struggling to clear their arrears. At the end of June 2008 there were 312,000 mortgages in arrears, up 16% since the previous year. The total amount of arrears now stands at £1.6 billion.
Between March and June this year, 11.054 more possession orders were made by banks on mortgages that had fallen into arrears. A possession is where a lender, having been granted a possession order by a Court, is able to sell the property and use the proceeds to reduce or pay-off the debt.
The figures come as the Bank of England warns that 500,000 more people face losing their home as a result of tighter household budgets coupled with falling house prices. It also warned that 1.2 million homeowners will go into negative equity (where the amount you owe on your mortgage exceeds the value of the property) if house price falls continue.
The Land Registry reports that annual house prices in England and Wales fell by 8% in September to prices last seen in autumn 2006. The average house price is now £168,814, while in London the average price is £328,927.