The Recession Is Making Repossessions Soar

The Recession Is Making Repossessions Soar Article Author:
Michael Challiner

It is a fact that one family evicted from their home every 10 minutes as mortgage lenders push up repossessions by 92 per cent. One family is being kicked out of their home every ten minutes after failing to pay their mortgage, figures revealed yesterday.

The Financial Services Authority, the City watchdog, has published statistics, which show that repossessions have virtually doubled over the last twelve months and is running at a rate of almost 60,000 a year.

The Conservatives have warned that these soaring numbers of repossessions represents only 'the tip of the iceberg'. As the economic crisis dramatically worsens even more families lose their battle to keep their roof above their head.

With many businesses going bust every day, unemployment is surging. And unemployment is one of the most common triggers for creating financial crisis for families and subsequent repossession.

A spokesperson for the housing charity "Shelter", said: 'These figures are not just statistics. They represent heartbreaking stories of real people losing their homes.' He then criticised the Government's attempts to stem the rising tide of repossessions, by saying they will help only 'a small number of those in trouble'.

Of course actual repossession is just the final step for many. The FSA's figures also show that mortgage arrears have spiralled. Unless many of these families can find the money to pay their debts, they too will face repossession. Some families are in such dire financial straits that their mortgage arrears represent more than 10 per cent of their total mortgage.

The Conservative's housing spokesman said: 'The Government's famous boast that they have ended boom and bust cycle, will provide absolutely no comfort for the thousands of families who will be repossessed over the coming year.'

A spokesman for the Lib Dem's said: 'The depressing fact is that the soaring numbers of people in mortgage arrears suggests that matters will get a lot worse.'

According to figures from the Department for Communities and Local Government, the future looks bleak for families who lose their homes. A record 2 million families, equal to about 4.6 million people, are on the council house waiting list in England.

Some commentators have accused the Government of sitting back while the social housing waiting list has exploded. The Department for Communities and Local Government insisted that the Government was doggedly doing everything possible to protect homeowners.

This presumably includes the Homeowner Mortgage Support Scheme, which has been delayed by months and months but which is now available. The Scheme is designed to help those who are having problems meeting their mortgage repayments but who are likely to get their finances back in order in the relatively near future. For example, those who can no longer work overtime, those who have had their working hours cut, those who had two part time jobs but have lost one or are relying on one family income instead of two.

Those who are accepted for the Scheme will see their lender delay some of the monthly interest due on their mortgage. This will enable monthly payments to be reduced for up to two years. It is important to appreciate that the money is not written off - it will eventually have to be repaid with interest.

Under the Scheme borrowers switch to an interest-only mortgage, if they have not already. Their lender will then get applicants to commit to paying as much as they can afford each month. The lender may also add other conditions. For example, they may stipulate that applicants should only have a small amount of savings. And not all mortgage lenders are participating in the Scheme. So whilst anything that helps families in financial trouble, the Scheme is very limited in who it can help.

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