House repossession orders soar

The number of households in England and Wales behind on their mortgage repayments and facing repossession was 66% higher this summer than in the same period last year, according to official figures released today.

The Department for Constitutional Affairs (DCA) said that during the third quarter of 2005 the number of mortgage possession actions entered in the county courts reached 29,991 - an increase of 55% on last year.

The figures, which include mortgages from local authorities as well as banks and building societies, showed that the number of orders to repossess was up 66% on the same period last year, to a total of 19,687.

Of these, 10.340 were suspended orders, allowing the borrower to take steps to prevent the repossession ever happening.

HSBC economist John Butler said the possession figures were a concern as interest rates had remained low during the period.

He added: "Overall the (repossession) levels are still low by historical standards but the rate of change is concerning given it has happened in a background in which households have been confronted with little bad news.

"That, perhaps, shows a greater sensitivity of households to smaller shocks than has been the case in the past."

However, the Council of Mortgage Lenders (CML) said the figures did not reflect the number of mortgage holders evicted from their homes.

Even where an order is not suspended, the lender and the homeowner can negotiate to settle without the home being repossessed, and this happens in the majority of cases.

The CML's latest figures, which cover just the first half of this year, show that while 36,366 possession orders were made, just 4,640 cases ended in repossession, a rate of one in 2,500 mortgages.

In the summer it said it expected the number of repossessions to hit 10,000 this year, and 11,000 in 2006. These figures compare with a peak of 75,500 in 1991.