Property repossessions soared by 65 per cent last year and there are predictions that the figures will be almost double 2005 levels within three years.
The Council of Mortgage Lenders reveals in documents to be released this week that repossessions were up from 10,310 in 2005 to 17,000 in 2006. This year’s total is expected to rise to 19,000 and to 20,000 by 2008 due to expectations of increases in interest rates.
These are the highest repossession figures since 2000 when the total reached 22,870 properties but still below the 1991 recession, when figures hit 75,540.
Arrears are also set to soar by 25 per cent this year due the payment shock of borrowers coming off fixed-rate mortgage deals following the rise of 75 basis points in bank base rate since August last year to reach 5.25 per cent now.
The number of people in arrears fell from 112,000 in 2005 to 104,000 last year but this is expected to rise to 130,000 this year and then fall back to 120,000 in 2008 as additional problems are reckoned to affect the market just for the short term.
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. But the CML notes the increase in repossessions slowed towards the end of 2006.
CML head of external affairs Sue Anderson says: “The situation has worsened but is not disastrous. Repossessions last year are not out of line with what we were forecasting.”