Rising number of homeowners risk repossession

According to new figures released by the Council of Mortgage Lenders (CML), a growing number of homeowners had their properties repossessed during 2008.

Approximately 40,000 repossessions were recorded last year, affecting holders of 1 in 290 mortgages.  The last time the rate of repossessions climbed so high was in 1991, when 75,500 properties were repossessed as a result of the early nineties housing crisis.

The increase in the number of repossessed properties was not entirely unexpected.  The CML originally predicted that 45,000 properties could be repossessed before 2008 came to an end.

CML director Michael Coogan credits the lower-than-expected number of repossessions to a growing interest among mortgage lenders to negotiate reduced payment plans with borrowers struggling to pay their mortgage;

“Despite the upward pressure on mortgage arrears and repossessions arising from the problems in the economy and rising unemployment, both lenders and government are continuing to find more ways to help more people stay in their homes.”

Despite growing lender cooperation and looming government aid, 2009 looks particularly bleak for homeowners falling into arrears with their mortgage.  The CML predicts that as many as 75,000 homeowners will have their properties repossessed in 2009.

This news comes on the heels of a report by the CML that gross mortgage lending in January fell to its lowest level since April 2001.

If you have fallen back on mortgage payments and are worried that your property might be repossessed, you should consider several options before handing over your keys to your mortgage lender.

- Don’t wait to contact your lender.  Taking positive action is the first step to letting your lender know that you are ready and willing to renegotiate payment options.

- Consider brokering a new deal with your mortgage lender.  Many lenders will be willing to offer temporary payment reductions or interest-only mortgages in order to allow you to continue paying towards your mortgage in the face of economic hardship.

- Consult an independent financial advisor.  Many independent organizations such as the Citizens Advice Bureau and National Debtline can offer you helpful advice unique to your financial situation.