The number of UK homes repossessed in the first quarter of this year rose to 12,800 according to figures from the Council of Mortgage lenders.

This represents a 23% rise in repossessions on the previous quarter, and a 50% rise on the 8,500 homes repossessed during the same period last year.

However, despite the massive jump, the CML has admitted that its earlier forecast of 75,000 repossessions in 2009 was ‘pessimistic’, and it expects to issue a lower prediction towards the summer. A total of 40,000 homes were repossessed during 2008.

There was also a sharp rise in the number of people who have fallen behind on mortgage repayments. The number of home loans with arrears of more than 2.5% of the mortgage balance rose by 12% from 182,600 in the fourth quarter of 2008 to 205,300 in the first three months of this year. This was an increase of 62% on the 127,000 in the first three months of last year.

Chris Tapp, director of debt charity Credit Action described the figures as “pretty ugly”.

However, the CML said that although the number of borrowers in arrears was on the up, lenders were committed to helping homeowners who get into financial difficulties.

The director general of the CML, Michael Coogan, said: “It is quite clear that the number of arrears cases is rising far more markedly than the number of repossessions.

“Lenders are demonstrably increasing the forbearance they are offering, while many struggling borrowers have gained some breathing space through lower interest rates feeding through to lower monthly payments.”

In November, the larger lenders agreed to wait at least three months after a homeowner falls behind on repayments before beginning repossession proceedings. Lenders were also told that they would have to provide proof that they had tried to negotiate alternative arrangements with borrowers before issuing a repossession order, including a full or partial repayment holiday, extending the repayment term and switching to a different type of mortgage.

The government has also introduced initiatives to enable struggling borrowers stay in their home. These include selling part or all of their home to a social landlord and renting it back, and allowing those who lose their jobs to defer a proportion of their mortgage interest payments for up to two years.

This entry was posted on Friday, May 15th, 2009 at 11:00 am and is filed under Credit Ratings and Reports, Housing Market, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.