Repossessions to rise rapidly

Repossessions in the UK are set to rise by 50 per cent next year, according to a report by the Council of Mortgage Lenders (CML).

It is thought there will be 45,000 repossessions in 2008, up 30,000 from this year. Such a rate has not been observed in the UK since the mid-1990s.

The crisis experienced by Northern Rock has led many mortgage lenders to make their lending criteria more strict and raise the rate on many mortgage products.

Combined with increases in the base rate, more homeowners are finding it hard to meet mortgage repayments.

Those with adverse credit or bad credit mortgages are most likely to fall victim to the trend, and will face a situation similar to that which recently took place in the US's sub-prime mortgage crash.

The CML said: "Borrowers facing difficulties should speak to their lender at the earliest opportunity. Lenders have a number of tools available to help borrowers with payment difficulties and will work constructively with each borrower on an individual basis.

"It is in a lender's interest to keep borrowers in their homes, if at all possible. But some increase in the number of possessions is inevitable."