Home repossessions are set to rise dramatically next year, and will reach levels not seen since the 1990s house price crash, according to figures released by the Council of Mortgage Lenders.
The Council predicts that the number of home repossessions will rise by 50% from 30,000 this year, to around 45,000 in 2008. House price growth is predicted to slow to just 1% next year, while the number of property sales will fall 15%.
This would represent the highest level of repossessions seen since the 1990s, though there are 1.5m more mortgages now than there were fifteen years ago.
The number of homeowners with mortgage arrears is also expected to rise, with 170,000 predicted to have problems keeping up with their payments, compared with around 145,000 this year.
The CML puts the rise in arrears and repossessions down to the five interest rate rises since last year, especially in the case of homeowners with fixed rate deals that are due to expire next year. The CML also predicted that total mortgage advances will drop to £340bn, compared with £360bn for 2007, though this would still be higher than 2005. Net lending will also drop next year, from £105bn to £90bn.
According to the CML’s Michael Coogan:
“The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago. We now expect a slower mortgage market next year, although by no means a stagnant one.”
If you are having trouble meeting payments, or are threatened by repossession, then it may be better to opt for a fast house sale to avoid repossession. Mortgage lenders habitually sell repossessed properties at auction, often for a much lower price then the property would attract normally.
A quick house sale could raise enough money to pay off your debts avoid repossession and protect your credit record, while a sell and rent back option could allow you to remain in your current home.