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Repossessions up by 54 per cent but loans safety net falters
Sri Carmichael, Consumer Affairs Reporter20 Feb 2009
HOME repossessions last year reached a 12-year high, figures showed today.
The data coincided with the announcement that a government scheme designed to save homeowners from having their house repossessed has yet to help anybody, and ministers do not expect it to come into force for two months.
About 40,000 homeowners lost their properties last year - up 54 per cent on 25,900 in 2007 - and the Council of Mortgage Lenders, which released the figures, forecast another 75,000 repossessions this year.
Alan Tomlinson, a partner of licensed insolvency practitioners Tomlinsons, said the data were "a sad reflection of the deterioration of the economy".
Despite this, the Government admitted that its Homeowner Mortgage Support Scheme, which was announced in December and allows households with loans of up to £400,000 to defer interest payments for up to two years if they suffer a sudden loss of income, was only given legal approval today and will not be up and running until April.
The Government has spent more than two months negotiating with lenders who refused to implement the scheme until they received the guarantee that they would not make any losses.
They said the arrangement would only defer a "repossessions spike" to 2011 and burden homeowners with unmanageable future payments.
Adam Sampson, chief executive of Shelter, said: "The Government has been guilty of rushing to announce schemes before the details are finalised. What that does is to give many people who are facing repossessions hope that something immediately will happen and in practice help is in some cases six months or more away."
Junior housing minister Ian Wright said the Government had needed to overcome "quite considerable and complex legal and administrative barriers".
Reader views (4)
Hello London,
It's a fact that everyone needs a roof over there heads, and many people have no choice today but to try and buy their homes, why?.
The Council housing stock since the Thatcher Government allowed people to buy the council properties is now at a all time low and some councils sold off the rest of the stock of council houses to housing associations on the cheap and then the associations charge very high rents far higher than the councils did, by the way what happened to all the money raised on the sales of council properties?.
Mortgages were only allowed if you had a deposit, and the income of the borrower was timesed by three and a half and that was the amount you were allowed to borrow, now today you can see why we are in a mess thanks to the banks and other lenders allowing huge sums of cash to be borrowed by people who don't earn enough to pay the money back, and if you loose your income the bubble bursts hence the huge rise in repossessions.
If the Government can bail out the banks, then the Government can bail out the home buyer, they have to or where on earth do people live?.Already we have a MASSIVE problem and this is the U.K., this Must be tackled with jobs being lossed by the shed load and unemployment pay will not pay mortgages and many do not have savings to hold off repossession orders.
Gordon Brown MUST look after the peoples of Britain and step in now to stop thousands being made homeless to do that a massive building program must start now.
- John L., Scarborough, N. YKS, U.K., 21/02/2009 09:17
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"Sad reflection of the deterioration of the economy and sports.It effect not only the UK, USA but also hte other countries of the global.
All this is gambling and only limited peoples are playing this game with the help of Banks. Atlast some one come forward to help the poor peoples who lost the life saving."
Does anyone know what this person is talking about????
- Andi-M, London, England Innit!, 21/02/2009 02:21
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In terms of affordability house prices have some way to go.
I have no sympathy for feckless, reckless idiots who took 125% mortgages, lied on self cert mortgages, took inadvisable multiples of current / realistically expected earnings. However housing is a need – people especially those with families need a house to build a future and as people are unlikely to delay settling down nesting until the right stage of the affordability index many sensible prudent people have been caught out. Quite often these are people with young families and other large outgoings. The irony of the situation is that the most reckless are probably last in line to suffer. From a lender’s perspective they will make less of a loss seizing and selling houses of defaulters who have built up some equity than those who have been less prudent and made no capital payments. In these circumstances the loss is born by the mortgagee if the house is sold for less than purchase cost. If the mortgage is 100% the lender is the one who loses. Welcome to the madness of modern Britain
- Libby, london, 21/02/2009 02:05
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Sad reflection of the deterioration of the economy and sports.It effect not only the UK, USA but also hte other countries of the global.
All this is gambling and only limited peoples are playing this game with the help of Banks. Atlast some one come forward to help the poor peoples who lost the life saving.
- M A Sular, London, 20/02/2009 17:47
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