creditcrunchnews

Repossessions of UK homes by lenders, increased by 54% last year to 40,000 according to figures released by the Council of Mortgage Lenders (CML). Although it was less than expected considering the Credit Crunch had started, the figure is set to increase to around 75,000 this year.

It seems despite lenders leaving repossession as a final last resort there has been a rise in borrowers simply handing back the keys to their home. The CML urge anyone struggling with their repayments to contact their lender and work something out before resorting to such measures as they would still be liable for the debt of the mortgage regardless of having given the house back to the lender.

Mortgage Arrears Increase

At the end of 2008, 182,600 borrowers were in arrears worth around 2.5% of the outstanding debt which amounts to 1.57% of all UK mortgages in existence. This is a large rise of 0.49% on the previous year and had risen from 1.29% at the end of September 2008.

Government Measures

Despite the economic crisis were experiencing at the moment, it seems measures that the government have put in place may be easing the threat of repossession. Measures include County Court Judges now having to ensure that all lenders can demonstrate they have tried to find and agree alternatives to repossessing homes with borrowers. Also Court action must not be taken within three months of the borrower missing mortgage payments.

The measures appear to be working as although the number of court orders rose 14% on the previous year in the final three months of last year to 29,095, it was roughly the same level as the previous quarter.

Worse Affected

The least affected part of the country seems to be Wales where there was a small increase of 1% to a total of 1,770 repossession orders compared to the worst hit area of the South West, where the level increased by a huge 20% to 2,378.

Further Measures

Minister of Justice reveal that these initiatives are working as lenders who are going to court to repossess property in England and Wales has now eased, having decreased by 32% to 26,008 in the last three months of 2008 and was down 29% from the same time in 2007.

Buy-to-Let Properties

Buy-to-let property loans make up 10% of all mortgages, yet they now account for 12% off all properties that are at least three months in arrears which is a considerable increase in the last 12 months. 4,000 buy-to-lets were repossessed last year which had doubled from the previous year’s total. New buy-to-let mortgages being granted in the last quarter of 2008 has also decreased by about 56% on the previous year to a total of just 36,000. Landlords are having a much harder time as property prices are decreasing with some suffering from negative equity, along with rent yields being reduced as people who cannot sell their properties are putting them up to rent which is increasing competition in the market.

The Royal Institute of Chartered Surveyors (RICS) have said that the government’s initiatives look like they’re going some way to ease the problems of repossessions although the number of people who are falling in arrears is increasing, however with the financial pressures most people are under at the moment in the UK, it’s hardly surprising.