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UK home repossessions hit 12-year high in ‘08

The CML said on Friday 10,400 properties were repossessed in the fourth quarter of last year, down slightly from 11,100 in the third quarter but well above the 6,900 repossessions recorded in the final quarter of 2007.

That took the total for the year to 40,000, up from 25,900 in 2007.

Figures from the Ministry of Justice showed court orders for mortgage repossession in England and Wales rose 14 percent on the year to a seasonally adjusted 29,095 in the final quarter of 2008, but were broadly the same as the third quarter.

The data show the difficulty many British homeowners were facing in coping with the cost of their mortgages as the economy entered recession at the end of last year.

However, the proportion of repossessions to the total number of mortgages is still well below that seen in the recession of the early 1990s.

The CML said repossessions in 2008 constituted 0.34 percent of all existing loans, compared with the series peak of 0.77 percent in 1991.

But analysts do not expect conditions to improve for some time, forecasting more homeowners will struggle to keep hold of their properties as the downturn continues this year.

Britain’s economy shrank 1.5 percent in the three months to December—the sharpest rate of decline since 1980 -- and the International Monetary Fund expects Britain to be the hardest hit among the world’s biggest economies this year. With house prices falling sharply, an increasing number of property owners are finding themselves in negative equity—when the value of their home is worth less than its remaining mortgage.

“Unfortunately, corporate failures, mortgage repossessions and individual bankruptcies all seem set to rise substantially through 2009,” said Howard Archer, an economist at Global Insight.

“Deep economic contraction, sharply rising unemployment, high debt levels, substantially lower equity and house prices, and more and more people being trapped in negative equity will exact an increasing toll on individuals over the coming months.”

The number of company winding up petitions issued by courts in England and Wales rose 18 percent on the year in the final quarter of 2008 to 3,382, the Ministry of Justice said, as the recession forces more and more firms out of business.