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UK ravaged by repo-rage

New figures from the Ministry of Justice highlight the UK's growing reposession problem...

According to the MoJ, the number of repossession orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008. The number of mortgage possession claims - the first stage of the repossession process when homeowners are threatened with action - was also up.  

The Ministry of Justice figures also show that the increase in the numbers of orders made was greatest in Wales - up 26% in the first three months of the year compared with the same period last year.

There was a 23% rise over the same period in the North West, and increases of 22% in the Midlands, 9% in the South East, 11% in the South West and 1% in the North East.

Lenders resorting to courts

The BBC's economics editor Stephanie Flanders observed:  â€œThe number of repossession claims and orders has been rising sharply since 2005, partly because a long period of rising house prices has given lenders an interest in prodding homeowners to sell.

�However, the great majority of these orders will not result in a house being repossessed, but clearly lenders are resorting to the courts more readily than they did in the past.

Commenting on the figures, Housing Minister Caroline Flint said: "It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early 1990s.

“The fundamentals of the housing market remain strong with high employment, low interest rates, and long-term demand for homes from first-time buyers."

Government must do more

Michael Coogan, Council of Mortgage Lenders director general, commented: "Today’s repossession numbers emphasise the difficulties that some home owners are having in meeting their mortgage payments. This difficulty may be exacerbated over coming quarters if people who want to re-mortgage find it hard to secure an affordable rate on their new deal.

"No-one wants to see repossessions rise. But risk is a part of life, and for some households circumstances change and they cannot get back on their feet. However, most people who suffer payment difficulties can get out of trouble by taking good advice, prioritising their debts, and communicating with their lender early.

"The government should consider investigating ways to lessen the impact of repossessions by providing better support and financing for housing associations to take action when families are at risk."