House repossessions increase

The first six months of 2005 saw a significant increase in house repossessions and mortgage arrears, according to the Council of Mortgage Lenders.

The number of house repossessions increased for the first time in seven years in the first half of this year, but figures for the latter half of 2004 were the lowest on record.

Between January and July 4,640 properties were repossessed, compared to 3,070 in the previous six months, representing an increase of 51 per cent.

However, the figures remain "extremely low" compared to the housing crash of the early 1990s. To put it in context, one in 2,500 properties were repossessed in the first half of 2005, compared to one in 250 in the second half of 1991.

Meanwhile, mortgage arrears of three to six months rose to 57,220 in the same period, up from 53,960 in the latter half of last year. The number of mortgages that had not been paid for six to 12 months increased to 30,980, up from 26,920 in the previous period.

"It now seems clear that the second half of 2004 marked the trough in the number of mortgage arrears and possessions. Arrears and possessions now look set to rise a little, but only to the sort of levels experienced in the past few years," said Peter Williams, Council of Mortgage Lenders deputy director general.

Recent rises in interest rates were largely blamed for the increase. Additionally, the labour market indicators look less positive and high levels of personal debt are not helping the situation, the Council of Mortgage Lenders notes.

However, recent gains in house prices will help some households through difficulty, without resorting to repossession.