According to figures from the Council of Mortgage Lenders (CML), the number of properties repossessed by lenders rose by 9% in the second half of 2006.

In total, 17,000 homes were repossessed in 2006, the highest number for six years. In the second half of the year, 8,860 were taken back by lenders, up from 8,140 in the six months to the end of June.

This equates to roughly 1 in 690, or around 0.15% of current home loans.

The CML is now forecasting that repossessions will rise to 19,000 in 2007 and 20,000 in 2008. This is higher than their December forecast, with the worsening in prospects attributed to higher interest rate expectations.

However, another indicator of borrowers in trouble - arrears - decreased in 2006.

The number of mortgages more than six months behind on payments fell by 8.5%, from 49,010 at the end of 2005 to 44,840 at the end of 2006. This represents only 0.38% of all mortgages - approximately 1 in 260.

Shorter term arrears, defined as between 3 to 6 months, also fell. The number of such cases dropped by 6% from 62,920 in 2005 to 59,100 in 2006.

CML Director General Michael Coogan predicts that arrears may rise again in 2007:

“The arrears picture at the moment is fairly complex. On the one hand, the wave of problems caused by previous interest rate rises has now worked through, so recently arrears levels have fallen. On the other hand, interest rates are rising again, and payment shock may be an issue for some this year as their existing fixed or discounted deals expire.

The CML’s Repossession Risk Review also reveals some interesting trends:

• Arrears rates on buy-to-let mortgages has been consistently lower than on home buyer mortgages, though this gap has started to narrow recently.
• London has seen the largest increase in numbers of court actions seeking repossession over the past few years, relative to the number of mortgaged properties.

There are alternatives to having your house repossessed. Contact Molae Properties today to find out how we can help you with our sell and rent back programme.