Repossessions 'to jump 75%'
House repossessions will rise by 75% this year, ahead of the worst property crisis for a decade, say mortgage lenders. It is feared that the numbers of families who will lose the roof over their heads will soar from 17,000 last year to 30,000.
The Council of Mortgage Lenders believes the figure will rise to 45,000 next year. The body, which speaks for banks and building societies, is also forecasting a surge in the number of householders at least three months in arrears on their home loans to 170,000.
The CML says that 15% increase is the final evidence that the property market is on the brink of its most serious turmoil since Labour came to power in 1997. The grim predictions came on a day Bank of England figures provided new evidence that the housing market is seeing a sharp reverse.
Just 102,000 loans for purchase were agreed last month, the lowest figure for more than two years and down by 20% on September 2006.
The property market is reeling from five increases in the Bank of England base rate in a year - which have pushed up mortgages by up to £200 a month - and the global credit crunch - which has seen firms restrict loans.
Estate agents have reported lower sales and even the most positive analysts suggest the market will stagnate for at least a year. Others, including the International Monetary Fund, warn of heavy price falls.
The CML predicts that total house sales will fall by 170,000 next year to just over a million. This, it believes, will wipe £20bn off mortgage lending, leaving it at £340bn. Property economists at Capital Economics are predicting a fall in prices of 3% in both 2008 and 2009.
A spokesman said: 'The Bank's data showed that higher interest rates are certainly having an effect on mortgage demand.
'Approvals in September fell to their lowest level in over two years. And with the tightening in lending criteria likely to affect the cost and availability of mortgage finance, we expect this downward trend to continue into 2008.'
Economist Alan Clarke, of BNP Paribas, said: 'The market is slowing. We think there will be plenty more downside in the coming months which will lead to a sharp fall in house price inflation further down the road.'
The Centre for Economics and Business Research is predicting price falls at the end of this year and through into 2008. However, it believes a property shortage, fuelled by a rising population, will see increases in 2009 and 2010.
Philip Hammond, the shadow Chief Secretary to the Treasury, blamed the misery of rising repossessions on the Government.
Property sceptics are predicting a serious downturn in the housing market, but will there be a crash?
He said: 'Gordon Brown's decade at the Treasury was characterised by years of easy credit fuelling a house price boom and a mountain of personal debt. But he has left a legacy of falling take-home pay and an increasingly ferocious credit squeeze - with homeowners and would-be homebuyers left to pick up the pieces.'
Home repossessions peaked at 76,000 in 1991, when a property bust followed the 1980s boom.
The housing charity Shelter fears the problem could be more difficult now because there is no longer any meaningful State safety net for those who cannot afford their mortgages because of unemployment or sickness.
Chief executive Adam Sampson said: 'The Government should show compassion and save thousands from the devastating effects of repossession and homelessness.'
• Thousands of homeowners appear to be consolidating debts by taking out new loans against their properties. Many others have increased their borrowing on credit cards and bank loans to try to make ends meet.
A recent survey by housing charity Shelter claimed a million people had used a credit card to make a mortgage or rent payment in the past year. The value of new loans secured on property, including those for house purchase and remortgaging was £31.21bn in September.
Unsecured borrowing through credit cards, overdrafts and loans increased by £1.35bn, the highest rise since January 2006.
Source: thisismoney.co.uk
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