An increasing number of Britons are becoming unable to afford the cost of property, new figures have indicated.
In research carried out by the Council of Mortgage Lenders (CML), some 14,000 homes were repossessed during the first six months of this year - a rise of about 18 per cent compared to the same period last year, accounting for one in 840 mortgages. Meanwhile, this figure was reported to be 30 per cent above the first six months of 2006. Findings from the financial services firm also showed an increase in the proportion of consumers who have mortgage arrears lasting three months or longer.
As of the end of June, the council estimated that 125,100 homeowners were in mortgage repayment difficulties. Although this was down by three per cent from the same time in 2006, the most recent figures are some four per cent higher than from statistics taken at the end of December. The majority of such mortgages (71,800) were reported to be in arrears of between three to six months. Meanwhile, 38,300 have outstanding debts accrued over a six to 12 month period, with 15,000 consumers said to be more than 12 months behind in making secured loan repayments.
Michael Coogan, director general for the CML, claimed: "The sharp rise in repossessions in the first half of this year has been driven by a combination of factors, but the absolute number of repossessions is still low by historical standards. Interest rates are clearly higher than many were expecting and are set to remain so. And the greater risks inherent in sub-prime lending are resulting in significantly higher levels of repossession in that part of the market compared to mainstream experience".
Mr Coogan claimed that the "vast majority" of homeowners will be able to cope with further increases in mortgage repayments, despite a current economic climate where "affordability is stretched". However, those who believe that they will be unable to cope with the extra pressure exerted on their finances were urged to get in touch with their lender to discuss setting up a more suitable payment strategy.
Commenting on the figures, David Stubbs, senior economist for the Royal Institution of Chartered Surveyors, said: "With the housing market slowing into 2008 and interest rates expected to hit six per cent, homeowners slipping behind with their repayments may be left stranded, unable to sell their way out of trouble. Levels are at their highest since the first half of 1999 with 77 homes being repossessed per day".
Earlier this year, a study by the CML indicated that a greater proportion of homeowners' salaries are going towards making secured loan repayments. According to research carried out by the council, first-time buyers are spending some 19.1 per cent of their income on servicing mortgage costs - the largest proportion recorded since 1992. Meanwhile, existing homeowners were also said to face "increased affordability constraints" as this factor accounts for 16.6 per cent of their spending. Stamp duty was also indicated as a growing area of financial pressure, as the highest-ever quantity of people moving home (86 per cent) had to pay the charge in May.
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