Despite signs of recovery in the form of reduced mortgage rates from a number of lenders, the number of mortgages in arrears and homes that have been repossessed continues to rise, new research from the Council of Mortgage Lenders (CML) has revealed.
The research shows that UK house repossessions jumped by almost 50 per cent for the first half of 2008, putting them at their highest level in twelve years.
In total, the CML reported that 18,900 homes were repossessed by lenders as borrowers struggled to keep up with their mortgage
The Financial Services Authority (FSA) warned lenders to play fair earlier this week as it became aware of premature repossessions and unfair play, particularly from specialist mortgage lenders
According to the CML
, "the credit crunch has hit the adverse credit sector harder than most of the mainstream market" and, as a result, the CML has been working with the Government, consumer groups and the FSA to ensure that as much as possible is done to help borrowers who may be facing financial problems.
Commenting on the situation, director general at the CML, Michael Coogan, said: "It is inevitable that more borrowers' coping strategies will come under pressure in current conditions than in the usually benign years of the last decade. That's why lenders, government and the advice sector are working closely together to minimise the impact on borrowers.
"No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender.
"Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options – the earlier the better," he advised.
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