Up to 75,000 families will lose their homes next year in repossession crisis
by Becky Barrow
More than 200 homes will be repossessed every day next year, the Council of Mortgage Lenders warned yesterday.
The toll will be three times as high as this year and within a whisker of the worst ever recorded in Britain. The forecast highlights the speed with which the economic meltdown is surging through family finances.
Last year, 26,200 mortgage-holders were evicted for falling behind with payments. Next year, 75,000 will be hit, a rise of nearly 200 per cent.
The wave of repossessions is likely to be accompanied by increases in divorce and cases of depression, as well as a chronic disruption of children’s lives. Many of the victims will be people whose jobs have been swept away by the recession.
As property prices slump, buyers seek bargains at auction like these repossessed homes in East London
There are fears many people will be left homeless, after the Local Government Association warned that the council housing waiting list will reach five million by 2010.
Rising repossessions will be an explosive issue [….], particularly if the victims are customers of banks which have been given billions of taxpayers’ money.
In a further blow, the CML said the number of repossessions was just the tip of the iceberg. A record 500,000 more people were in the ‘last chance saloon’ over their mortgage payments.
The CML also warned that Britain’s mortgage drought is going to be much worse next year.
For the first time since records began in 1964, it said, net lending will be negative at minus £25billion, an extraordinary situation.
This means that homeowners will pay back more money on their loans than banks and building societies will hand out in new loans.
Anybody who needs to sell their home, the CML said, will face a monumental struggle to find a buyer.
It expects just 700,000 homes to be sold next year, which is less than half the level in 2007. In a ‘normal’ year, around 1.5million properties change hands. Many of the repossession victims will be workers who have lost, or are about to lose, their jobs.
Every day, more than 2,500 people are joining the dole queue. They took out mortgages during the property boom which they could barely afford to repay when they were in work.
Without a regular income, the battle to pay a super-size loan and soaring household bills quickly becomes impossible.
A third of Britons do not have enough money set aside to cope in an emergency, according to the Government’s savings arm NS&I.
Adam Sampson, chief executive of the homeless charity Shelter, said: ‘It is yet more bad news for many homeowners already facing a bleak winter of rising fuel and housing costs.’
This is because too many lenders have allowed people to take out mortgages which they could not afford, even if base interest rates were to fall to zero per cent. Northern Rock, the nationalised bank, said it expects to be responsible for one in ten repossessions this year.
About 75 per cent of its repossession victims had a ‘Together’ mortgage which let customers borrow up to 125 per cent of the value of a property.
EasyRoommate.com has seen a three-fold increase in the number of people taking in lodgers in the past three months.
Tamara Smith, the website’s business development manager, said: ‘In an effort to cover their mortgage payments and avoid the prospect of repossession, we have seen the number of people taking in lodgers triple in the past three months.
‘We expect this figure to rise significantly in 2009 as people do everything they can to boost their incomes.’