The recent interest rate rises and volatility of the sub-prime housing market has seen a huge growth in the number of repossessions and residential properties being sold at auction, the Royal Institute of Chartered Surveyors has revealed.
The research found that the number of residential properties going under the hammer rose by 32 per cent in the second quarter of 2007, marking a 22 per cent rise on the last quarter and the highest number of auctions in more than two years.
Homebuyers have been hit hard by five interest rate rises over the last 12 months and the knock on effect of the collapsing sub-prime market in the US, so people are losing their homes because they cannot keep up with the repayments – a trend that RICS does not expect to alter, predicting a further rise to more than 45,000 repossessions in 2008.
“With the full impact of interest rate rises in 2007 yet to filter through into higher mortgage costs we continue to expect a rise in the number of homes going under the hammer into 2008.” said RICS economist, Oliver Gilmartin. “The Auction house will continue to be a quick means to foreclose mortgages where properties have been repossessed.”
Mr. Gilmartin continued: “Encouragingly, the annual growth rate in repossession orders has eased back in 2007 having risen quite sharply during the back end of 2006. However, RICS estimate that repossessions will continue to climb higher into 2008 and could exceed 45,000, a rise of 50 percent from current annualised rates.”
Learn more about the knock on effect of the US sub-prime mortgage meltdown
and compare mortgage deals