Repossessions in sharp rise

In a gloomy piece of news for the sector, the Financial Services Authority (FSA) has said that the number of people losing their homes after failing to meet mortgage repayments has risen sharply.

The UK’s financial watchdog has announced that the number of UK repossessions in the second quarter of 2008 was 11,054, representing a dramatic 71 per cent increase compared with Q2 2007. Moreover, the FSA warned of a rise in the number of people struggling to clear home loan arrears.

Repossessions had been rising since September of 2007, said the FSA, adding that the number of people who have fallen behind with mortgage repayments for at least three months has also been rising steadily for more than a year, with cases up 16 per cent on a year ago.

This is the second occasion on which the FSA has issued such figures, which were based on data collated from 300 regulated mortgage lenders and administrators.

The downbeat news accompanied predictions of further woe for homeowners from the Bank of England, whose Financial Stability Report believes 500,000 UK homeowners are now in negative equity (when mortgage debt exceeds the value of a property) in the wake of the UK property crash.

On top of that, according to the Land Registry, house prices have fallen once again in England and Wales, with prices declining by 2.2 per cent in September, leaving the average home worth £168,800, down eight per cent on a year ago.