Credit crunch hits home

10:09am Sunday 17th August 2008

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By Gareth Lewis »

THE number of homeowners in Winchester at risk of losing their property has shot up by nearly 70 per cent on last year as the credit crunch starts to really bite in the county.

Although the total number of homes under threat is just 54 in the historic city, it represents a dramatic 69 per cent rise on the number affected in the first six months of 2007.

In Hampshire, 1,004 homes are the subject of court repossession orders - a rise of 14 per cent on the first half of last year, and well below the national increase of 24 per cent.

Housing charity Shelter said mortgage lenders were "still using repossession as the first rather than last resort" and attacked lenders for showing "little compassion".

Almost a quarter of the homes at risk of being taken back by lenders in the county are in Southampton, where 245 families are living under the threat of repossession.

The figures from the Ministry of Justice (MoJ), released yesterday, relate to court activity, which may or may not result in a possession.

A mortgage repossession order is granted by a court and entitles the claimant - usually a lender - to apply to have the occupier evicted. A claim is issued in a county court and begins an action for a repossession order.

The MoJ said there were 39,078 mortgage possession claims in the UK in the second quarter of 2008 - an increase of 17 per cent on 2007, but unchanged on the first three months of the year.

The number of repossession claims reached a 15-year high at 137,591 last year and has continued to climb as the higher cost of mortgages hits homeowners following a series of interest rate rises last year.

In recent months homeowners have had to refix their mortgages at significantly higher mortgage rates after the cheap fixed loans they took out several years ago expired.

Lenders have also become less willing to lend money amid the credit crunch, with many people at the end of short-term deals finding it hard to remortgage and often forced on to their lenders' more expensive standard variable rate.

Shelter said the proportion of people coming to the charity for help with mortgage possession actions over the past six months had increased by more than half.

Chief executive Adam Sampson said: "Every day Shelter is seeing more and more ordinary hardworking people who are terrified of losing their homes. They are being punished by rising household bills, escalating fuel charges and food prices that are going through the roof.

"Tens of thousands are living with the fear of having the home they've worked so hard for being repossessed by lenders with little compassion."

City watchdog the Financial Services Authority has called on Britain's mortgage lenders to be flexible and sympathetic.