Property repossessions rocketed by 65 per cent last year, with 2006 representing a six-year high.
The Council of Mortgage Lenders has revealed that repossessions were up from 10,310 in 2005 to 17,000 in 2006. They are expected to rise to 19,000 this year and to 20,000 by 2008 due to higher interest rate expectations.
Arrears are also set to soar by 25 per cent in 2007 due the payment shock of people coming off fixed rate deals following the 75 basis point interest rate rise since August to 5.25 per cent.
The number in arrears fell from 112,000 in 2005 to 104,000 last year but is expected to rise to 130,000 this year but drop to 120,000 in 2008, as additional problems are likely to be short term.
It is the highest repossession figure since 2000 when the total was 22,870, but still below the 1991 recession, when the figure reached 75,540.
The CML said in leaked documents in July that the growing sub-prime market’s tougher stance on arrears would lead to more repossessions in 2006. However, the CML notes that the increases in repossessions slowed towards the end of 2006.