Repossessions rise to highest level in 14 years

Wed, 07 Jun 2006

Figures for repossessions have risen to their highest level in 14 years and the situation is likely to get worse than it is better warn the Royal Institution of Chartered Surveyors .

Figure for actions entered by lenders, the first stage of repossession rose by 29 per cent in the first quarter of this year to 33,442, which is the highest level since the third quarter of 1992. Orders made by Courts to repossess properties were 78 per cent higher in the first quarter of 2006 compared to the same period in 2005.

RICS economist David Stubbs says "The main reason behind the upturn in repossession activity is the rise in interest rates that began at the end of 2003 and continued to August 2004. This interest rate rise increased mortgage interest payments by a substantial margin, and therefore an upturn in repossession activity is not a surprise."

"However, the quarter per cent interest rate cut last August eased the pressure on indebted households somewhat. Indeed, Bank of England figures show that the average interest rate on a standard variable mortgage is well below levels of this time last year."

"The sustained rise in unemployment during the past year has played a key role, and suggests that the numbers entering into the repossession process are likely to increase further during the second quarter. Moreover, as interest rates are set to increase later this year, the upward pressure on repossessions will not abate quickly."

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