 |  | By Lorrie Kelly Staff Writer Tuesday, 13 May 2008 |
2008 Home Repossessions Are Up
Regional increase in repossession claims since this time last year:
- Wales: Up 26%
- North West: Up 23%
- Midlands: Up 22%
- South West: Up 11%
- South East: Up 9%
- North East: Up 1%
- London: Down 6%
Source: Ministy of Justice
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PLUMMETING property values and rising mortgage rates have combined to make 2008 the worst year in terms of total home repossessions since the 1990’s housing crash despite the Bank of England freezing interest rates.
The Building Societies’ Association has warned that the Bank of England’s £50 billion rescue plan is destined to fail and a recovery seems unlikely in the near future as the number of new home sales continues to fall.
Lenders such as Alliance & Leicester announced they will increase their cost of repaying a mortgage by nearly £900 per year for the typical UK homeowner.
This is an attempt to recoup losses from property value declines which have recently plagued the mortgage lending industry.
Detrimental knock on effect
But experts agree that the rising mortgage rates are having a detrimental knock-on effect.
House values are being driven further down leaving many UK homeowners unable to cope with the financial burden of a housing market recession.
The effect is made worse by increased costs of food and fuel.
For example, monthly payments of a typical £158,000 mortgage have already risen from £993 per month to £1065 and fees have skyrocketed from a fixed £999 to 2% of the total purchase price, or £3,160 for the same £158,000 home.
Analysts are predicting that 2008 will see repossession rates rivalling totals from the 1990’s property crash.
123 repossessions a day
The Royal Institution of Chartered Surveyors (RICS) estimates that around 45,000 homes will be repossessed this year - a staggering 123 repossessions per day.
This prediction has been supported by the number of mortgage possession orders processed so far which has already risen by 17% in the first quarter.
UK courts have reported that from January through March 2008, mortgage possession orders totalled 38,688 compared to 33,344 during the same period in 2007.
Surprisingly, the only area in the UK which has managed to remain unscathed thus far was London, which has actually seen a 6% decrease in mortgage repossession claims.
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