One family will have their home repossessed every seven minutes as the number of defaulted mortgage payments jumps dramatically this year, city regulators have warned.
The number of people losing their homes nearly doubled in the three months to the end of September last year, according to new figures released by the Financial Services Authority (FSA).
A total of 13,161 properties were repossessed around the UK during the third quarter of 2008, representing a 92% increase since the previous year.
However, a large proportion of these remained unsold, with the number of homes offloaded by lenders increasing by less than 10%.
The Council of Mortgage Lenders (CML) said that the situation was only likely to worsen during 2009, with up to 75,000 repossessions expected over the course of the year as hundreds of thousands of homeowners slip behind in their mortgage repayments.
Regulators recorded a 24% rise in the number of people failing to make mortgage payments in July to September, bringing the total to 340,000. The increase was 10% compared to the previous quarter, the watchdog said.
The FSA also noted a sustained increase in borrowers left dangerously behind in their payments, with the number of people running up arrears of more than 1.5% of their outstanding debt – equivalent to being at least three months behind with payments – rising by around 4% in each of the previous five quarters.
The cumulative impact is equal to an overall rise of nearly 22%, but FSA officials said the one-off 10% jump in the third quarter was “more significant” than the longer-term increase.
The latest increases mean that 2.92% – nearly one in 30 – of mortgage holders are unable to keep up with their repayments, and are paying an average of just 42% of their target each month.
Despite the growing number of homes coming on to the market as lenders seek to recoup losses from lapsed mortgage payments, thousands remained unsold at the end of the period, indicating a lack of confidence and available funds from consumers and investors.
During the third quarter of 2008, the number of unsold repossessed homes jumped to 27,123, according to the FSA, more than double the number in the previous year and up 27% on the quarter immediately before.
Charities and political leaders alike pointed to the serious implications these statistics would have for households around the UK.
Graeme Brown, director of housing and homelessness charity Shelter Scotland, said: “These new figures are not just numbers, they are heartbreaking tales of people losing their homes.
“They show just how difficult and miserable 2009 will be for homeowners. With repossessions up 92% in the last year, 60,000 new cases of arrears and an estimated 500,000 homes in negative equity across the UK, we are without question engulfed by a housing crisis worse than the 1990s crash.”
The new figures came a day after the Scottish Government announced £10m of extra funding to cover homeowners struggling to keep up with mortgage payments. Communities Minister Stuart Maxwell said on Wednesday that the Home Owners’ Support Fund would be backed by £35m over the next two years.
But Mr Brown added: “While we welcome the additional money committed to the Home Owners’ Support Fund, it will help just some of those in trouble.
“It is vital we see more investment from the Scottish Government towards affordable rented homes to help ease the housing crisis. We know times are tough right now, but a home for anyone who needs one is the mark of a modern and decent society.”
Citizens Advice head of consumer policy Sue Edwards said: “These new figures are deeply troubling but come as no great surprise in the current economic climate. Our bureau network is currently dealing with 325 new cases involving mortgage arrears every working day.
“One of the most worrying things to emerge from today’s FSA figures is not just the sharp rise in repossessions, but a matching rise in the number of repossessed properties that remain unsold.
“This means that many of those who have already lost their homes continue to rack up substantial amounts of additional debt, as they are liable for interest and other charges until the repossessed property is sold.”
January 23 2009