The number of homeowners facing repossession has jumped by more than 90% over the past 12 months, according to official statistics from the financial watchdog.
The Financial Services Authority’s (FSA) latest mortgage lending data shows that, in the third quarter of 2008, the number of new house possessions increased by 92% compared to the same period the previous year, with 13,161 new cases.
The data refers to possession orders, which are issued to lenders by the court. However, not all possession orders lead to people being evicted from their homes.
The number of borrowers missing payments also increased during the period, with a 24% rise in borrowers three months in arrears. Around 2.9% of all mortgage borrowers are now behind with their repayments, with those struggling typically only managing to repay 42% of their full monthly payments.
The FSA reports that Britons now collectively have £1,194 billion of mortgage debt.
Despite the government announcing several initiatives to help struggling homeowners since September last year, experts still believe the number of arrears will increase – and potentially surpass the levels seen in the last recession.
Seema Shah, property economist at Capital Economics, warns that rising unemployment will result in more people missing payments.
“Government measures to limit the number of households in mortgage arrears who eventually lose their home will only go so far,” she adds. “Accordingly, we think it likely that possessions will surpass the early-1990s peak of 75,500.”
Citizens Advice Bureaux has reported a 35% rise in the number of people contacting it about mortgage and secured loan arrear problems, with enquiry numbers hitting 77,324 in September 2008.
Sue Edwards, head of consumer policy at Citizens Advice, says it is currently dealing with 325 new cases involving mortgage arrears every working day.
“To prevent this situation getting worse, it is vital that mortgage lenders treat borrowers in arrears fairly and sympathetically, and do everything in their power to help them come to a workable solution over repayment arrangements,” she says.