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Rate of repossessions rises as housing recovery slows

ALMOST 14,000 Britons lost their homes in the third quarter of 2009 as mortgage lenders increased the rate of repossessions, the Financial Services Authority (FSA) revealed yesterday.

Repossessions rose 2.8 per cent on the same period of 2008, but the FSA pointed out that the 13,987 properties taken back by lenders was five per cent down on the first quarter of the year.

But the number of new arrears cases continued to fall, down by 10 per cent in the three months to September to 46,000 and the number of accounts in arrears had fallen by two per cent over the quarter.

New advances totalled £40bn, an increase of 20 per cent on Q2, but remain lower than the £61bn advanced in Q3 2008. In a sign that buyers are returning to the housing market, lending for house purchase made up over half of all new lending for the second quarter in a row.

Meanwhile, the government reported that house prices rose for a fifth month in a row in October, rising 0.5 per cent on the month and trimming the annual decline to 2.2 per cent. Analysts warned that October’s rise was less than half the 1.2 per cent increase seen in September. Howard Archer at IHS Global Insight said: “The government’s data fuel our scepticism that the house price rally seen since early 2009 can be sustained for much longer.

“Admittedly, very low mortgage interest rates are likely to remain supportive for the housing market for some considerable time to come, but other fundamentals are largely unfavourable.

“Housing market activity is still at a low level compared to long-term norms, unemployment is high and still rising, earnings growth is low and falling, and house price/earnings ratios are currently moving back up,” he added.