Repossessions Fall But Warnings They Will Climb Again

According to telegraph.co.uk, during 2010, 36,000 home owners were repossessed, the lowest number recorded since 2008. However, experts gave warning that the repossessions were likely to climb this year, with tight economic conditions, increasing unemployment and the likelihood of interest rate rises expected to make life very tough for many mortgage holders.

The Bank of England left interest rates at their record level of 0.5 per cent for the 23rd consecutive month on Wednesday, leading some economists to warn the Bank missed an opportunity to curb inflation.

Howard Archer, chief UK economist at IHS Global Insight said "A significant number of home owners are still at risk, particularly if economic activity is muted and unemployment moves higher in 2011 as tighter fiscal policy increasingly bites. The substantial fiscal squeeze will increasingly hit public sector jobs and consumers' pockets, while households already face high unemployment, negative real wage growth and elevated debt levels."

He further added "Furthermore, any rise in interest rates would be liable to send a significant number of financially stretched people over the edge. There is now a very real likelihood that the Bank of England will raise interest rates sooner rather than later to counter rising inflation."

The CML predicts that 40,000 homes will be repossessed during this year. Separately, the Ministry of Justice said courts in England and Wales issued 14,847 orders for home repossession, according to seasonally adjusted data in the October to December period.

Michael Coogan, the director general of the CML, said: "As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available."

Two easy ways to get a no obligation offer for your property.