Increase In Secured Loan Arrears And Repossessions
At the beginning of this year, the Council of Mortgage Lenders (CML) warned the mortgage loan industry as a whole that it expected to see a dramatic increase in the number of repossessions of people’s homes throughout the course of 2008, due to the effects of the credit crunch and according to the latest figures, they appear to have been right so far.
New figures from the Financial Services Authority (FSA) have revealed that the total number of repossessions of properties in arrears on their loans has increased by a staggering 71 per cent between the first three months of 2007 and the second three months of this year. It also looks as though the situation is continuing to get worse as the UK economy continues to slow down, with a total of 11,054 homes being repossessed during the second quarter of the year, as opposed to 9172 in the first quarter.
The figures also show that although the number of new arrears cases on borrower’s mortgages and loans has remained fairly constant at around 54,000 new cases every three months since the start of 2007, individuals are now finding it harder to get their loans back up to date with their repayments and as a result, the total amount of arrears on loans has also increased.
By the end of the second quarter of this year, there were 312,000 loan accounts in arrears, with a value of £1.6 billion, which shows an increase of 16 per cent over the same time last year.
The total amount of lending on mortgages and secured loans now stands at £1,178 billion, which shows an increase of 7.5 per cent above the same time last year, although this rate of growth in new loans has slowed significantly over the course of this year to just one per cent in the last quarter.
Vince Cable of the Liberal Democrats warned that the problem of home loan repossessions could get worse as property prices continue to fall, he said “If conditions deteriorate further, the current stream of repossessions will become a torrent.”
