A sharp rise in the number of people unable to keep up payments on their mortgages added to concern over unaffordable housing costs.
The number of court actions entered into to repossess homes rose to 29,991 in the third quarter, the highest number since 1993, figures from the Department of Constitutional Affairs (DCA) showed. Although only a fraction of repossession proceeding result in houses being taken from borrowers, analysts said that the speed of the rise (up 55% over the year) suggested that unaffordable housing was a growing problem.
The HSBC said that slower growth in household earnings and a rise in unemployment had combined to make houses less affordable. Flat house prices meant that homeowners could not borrow from rising levels of equity in their homes, but because house prices had not weakened significantly and interest rates had been cut by only a quarter of a percentage point, it was difficult for new entrants to join the market.
However, the Council of Mortgage Lenders (CML) which tracks the number of repossessions, said that the final number of repossessions would still be relatively small. In the first half of this year there were 54,344 court actions entered into but only 4,640 actual repossessions. Full repossession took place in only 2,500 mortgages.
A spokesman for the CML said “Lenders will happily abandon possession proceedings right up to the last minute if satisfactory payment arrangements can be reached.” The CML expects repossessions to hit 10,000 this year – compared to 76,000 in the peak of 1991.
The Shadow Chancellor George Osbourne said “Sadly, for an increasing number of homeowners, mortgage bills are proving beyond their means. Gordon Brown’s tax rises won’t have helped families struggling to make ends meet.” |
