The Financial Services Authority has revealed a sharp rise in mortgage arrears and repossessions.
The regulator issued the grim findings last week, showing that at the end of Q4 2008 there were 377,000 mortgages in arrears, an increase of 36,000 since Q3 2008 and a 31% year-on-year increase.
New repossessions for 2008 increased by a staggering 68%, from 27,900 in 2007 to 46,750 in 2008.
While repossessions in Q4 2008 were 60% higher than a year earlier at 13,028, the figures were a slight improvement on the 13,464 repossessions seen in Q3.
The figures also showed new lending peaked in Q3 2007 at £102bn before declining to £45bn in Q4 2008, leaving gross lending 26% lower in the quarter and 48% lower year-on-year.
Nick Hopkinson, director of Property Portfolio Rescue, warns the marginal drop in repossessions reported for Q4 2008 compared with Q3 2008 will not continue into 2009.
He says: “It is simply a result of recent changes to court processes and other short term government initiatives.
“Repossessions in 2008 were up 68% on the previous year and this trend will continue, both for individuals and landlords. We forecast that repossessions will exceed 80,000 by the end of 2009.”
He says in reality repossession is unavoidable for many struggling to make mortgage repayments and the recent changes in court process will do nothing but delay the inevitable.
He adds: “House prices still have further to fall and for many of those struggling now the best solution would be to sell up quickly before they find themselves further in arrears and any remaining equity in their property or portfolio of properties diminishes altogether.”
The Council of Mortgage Lenders predicted there would be some 45,000 repossessions in 2008 and it maintains that for 2009 repossessions are likely to rise to 75,000 for the year.