Home repossessions at 8-year high

Home repossessions last year hit their highest level since 1999 and are likely to increase, the Council of Mortgage Lenders said on Friday.

The trade group said more than 27,000 homes were repossessed in 2007 and forecast repossessions would rise to a total 45,000 in 2008 - still far fewer than the 75,000 homes that were repossessed in 1991 at the height of the last recession.

Economists expect a sharp rise this year as the global credit crunch bites.

"The financial pressure on many home owners is increasing," said Howard Archer from Global Insight. "It seems certain that repossessions will trend up significantly during 2008, particularly if the economy suffers an extended marked slowdown and unemployment starts rising."

Separate figures from the government showed mortgage repossessions in England and Wales rose an annual 6 percent in the last three months of 2007.

The mortgage lenders said 13,500 homes were repossessed in the second half of 2007, marginally below the 13,600 in the first half and 10 percent lower than they had forecast.

But the global economy now appears to be entering the slowdown presaged by the soaring rate of repossessions in the United States that lead to the dismantling of complicated credit derivatives underwritten by mortgages.

The economy grew by around 3 percent last year but is expected to expand by less than 2 percent this year.

"The number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage funding markets," said Michael Coogan, CML director-general.