Repossessions soar to eight year high

Stretched affordability, tighter lending conditions, and high interest rates all contributed towards repossession levels in the UK soaring to an eight year high last year.

Over 27,000 homeowners had their properties repossessed last year, reflecting a rise of 20%. Many others could face repossession in the next year and a half according to the FSA.

Experts are advising those that are struggling with mortgage repayments to contact their lenders in order to reach an agreement rather than do nothing and risk repossession.

One industry official said:

‘Lenders take their responsibilities to borrowers facing repayment difficulties very seriously, and many go to exceptional lengths to provide debt counselling, reschedule payments, extend loan terms, or in some circumstances even allow payment breaks. They will abandon repossession action right up to the last moment if they can reach a payment solution consistent with both the borrower’s and the lender’s interests.’

He went on to say:

‘Despite this, the number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage-funding markets. No-one is necessarily to blame for this - even the best risk assessment cannot provide a crystal ball insight to the future for each particular borrower.

But that is all the more reason to ensure that there is a fair and reasonable balance of responsibility between consumers themselves, their advisers and lenders, and the system of State support to ensure that home-ownership remains sustainable and that repossessions are minimised.

Anyone who thinks they might be heading into difficulty should contact their lender, as problems are easier to resolve if they are tackled at an early stage. Lenders want to avoid repossessions just as much as borrowers do.’