Budgets squeeze costs 45,000 their homes

Published on 09/08/2012 00:38

Home repossession figures are expected to show an increase today, as the troubled economy starts to take its toll on households.

The Council of Mortgage Lenders (CML), which will release records for the second quarter of 2012, predicts that repossessions will rise from 37,000 in 2011 to 45,000, as people’s budgets remain under pressure at a time of high unemployment and low wage rises.

The 9,600 repossessions in the first quarter of this year represent a 10 per cent increase on the last three months of 2011, but stable compared with a year earlier.

The CML has said lenders’ forbearance has helped to ease the situation, with some reducing rates temporarily, as well as extending payment dates.

But it said: “Continuing economic and employment uncertainty, combined with the effect on household finances of higher living costs and squeezed incomes, have led us to forecast an increase in the number of cases of repossession to 45,000 this year.”

More than a million home-owners saw their mortgage rates rise in May, following a string of increases announced by lenders, blaming the weak economy and the increased funding costs.

Lenders have also been tightening their borrowing criteria, causing a drop in the proportion of mortgage approvals, making it tougher for people to get a mortgage or switch to a cheaper deal.

The CML has called for the UK government to extend some temporary benefit arrangements for at least another year to help those who are struggling.