Repossessions will Rise


The Council of Mortgage Lenders have predicted the number of residential repossessions will rise to 45,000 in 2008, a 50 per cent increase on the total 2007 figures. This is been driven by tighter lending conditions and five interest rate rises since last August. Consumers are struggling to keep up repayments.

Mortgage lenders have become stricter with their mortgage borrowing practices in response to the credit crunch and there are fears that repossessions will increase even further, as they have done in the US.

Paul Holmes, operations director at Firstrung.com, said: “If the UK were to experience similar levels of repossessions, vis a vis number of households, then the CML estimates would in fact prove to be very conservative - the US is facing up to two million repossessions in 2008.”

Things could become even worse for consumers as banks prioritise their own financial worries in the face of a global crunch.

"You have to wonder just how, for example,” said Holmes, “Northern Rock customers faced with mortgage difficulties are being treated at the moment, whilst the lender is fixated on survival by any means.”

The possibility of price increases on borrowing could mean serious trouble for many homeowners already stretched to the limit. Some estimates suggest that they could face an increase of around 2 per cent next year which would affect around 350,000 borrowers.

"Whilst we have always acknowledged the personal responsibility of mortgage borrowing,” added Holmes “If rates are drastically hiked, due to market pressures forcing lenders to squeeze the pips out of every customer, then we could be forcing customers into hardship in favour of finance market stability, which is in fact an unfair burden on the innocent mortgage holder."

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