Home repossessions at 12-year high

Lenders repossessed 18,900 homes after their owners failed to keep up with mortgage repayments, up 48% on the same period last year, the Council of Mortgage Lenders (CML) said. And the CML warned the figure is set to reach 45,000 by the end of the year.

The home repossessions in the first six months of the year -equivalent to 0.16% of all mortgages - compares with 12,800 in the first six months of 2007 and 13,400 in the second half of last year.

The Financial Services Authority (FSA) fired a warning shot to lenders earlier this week after finding that specialist mortgage firms were "too ready" to take court action against borrowers.

Housing charity Shelter said the figures were "shocking" and that hard-pressed homeowners were also now only given state help after nine months - too late to prevent many from losing their homes, it claimed. Shelter chief executive Adam Sampson said: "Behind these figures are thousands of families facing sleepless nights worrying about how to make their next mortgage payment, and many thousands more will be waking up to the frightening reality of repossession."

The Government steps in to help those who have lost their income by helping with the interest payments on home loans, but has delayed the time limit so that it kicks in after nine months, rather than six months previously.

The CML said the rate of repossession, at 0.16%, was still low in the context of the entire mortgage market and less than half that experienced amid the housing market crash of the early 1990s.

The figures also reveal that the number of mortgages three months or more in arrears has risen by 29% year-on-year to 155,600 at the end of the first half. This is equivalent to 1.33% of all home loans, although the number of mortgages more than six months in arrears was 0.58% of all loans.

The Legal Services Commission (LSC) announced greater support for hard-pressed homeowners in the wake of the CML figures. It said it was extending emergency legal aid schemes for people facing repossession to 20 more county courts, with others to follow.

Housing minister Caroline Flint said the measure would "make a real difference in ensuring that repossession is only ever used as a last resort". "Whilst the rate of repossessions is not on the same scale as the early 90s, we want to ensure that the right support is in place for those who might need it now because of global economic pressures," she said.