(LONDON) British home repossessions last year hit their highest level since 1999 and are likely to increase, the Council of Mortgage Lenders (CML) said last Friday.
The trade group said that more than 27,000 homes were repossessed in 2007 and forecast that repossessions would rise to a total 45,000 in 2008 – still far fewer than the 75,000 homes that were repossessed in 1991 at the height of the last recession.
Economists expected a sharp rise this year as the global credit crunch bites.
‘The financial pressure on many home owners is increasing,’ said Howard Archer from Global Insight. ‘It seems certain that repossessions will trend up significantly during 2008, particularly if the economy suffers an extended marked slowdown and unemployment starts rising.’
Separate figures from the government showed that mortgage repossessions in England and Wales rose an annual 6 per cent in the last three months of 2007.
The mortgage lenders said that 13,500 homes were repossessed in the second half of 2007, marginally below the 13,600 in the first half and 10 per cent lower than they had forecast.
But the global economy now appears to be entering the slowdown presaged by the soaring rate of repossessions in the US that led to the dismantling of complicated credit derivatives underwritten by mortgages.
Britain’s economy grew by around 3 per cent last year but is expected to expand by less than 2 per cent this year.
‘The number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage funding markets,’ said Michael Coogan, CML director-general.
Source: Reuters (Business Times 12 Feb 08)