Mortgage repossession orders in Q4 2005 go up 58% |
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Sat, 04 Feb 2006 09:10
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LONDON: The number of mortgage repossession orders in the fourth quarter of 2005 in England and Wales increased by 58 per cent, according to the department of constitutional affairs of the government.
The department said Friday as many as 18,784 orders were issued during the quarter, while 31,018 mortgage possession actions were sought. The number of actions entered were 50 per cent higher than the previous year and is the highest since the third quarter of 1993, when the housing market was just emerging from a devastating state.
The department's figures match the statistics of the Council of Mortgage Lenders, which reported that home repossessions increased by 22 per cent to 5,630 in the second half of 2005, compared to the first half.
Analysts are now warning that there could be a spate of repossessions and insolvencies during the year as the economy is poised for a slow growth and unemployment is all set to rise further.
Meanwhile, the department of trade and industry came out with details showing the number of people in England and Wales not able to repay debts had risen to its highest in the last four decades at the end of 2005. There were as many as 70,000 individual insolvencies during the year. The number went up 57.1 per cent in the fourth quarter compared with a year earlier period to a seasonally adjusted 20,461. This is the highest quarterly total since records started getting maintained in 1960, the department said.
The department said the number of company liquidations during the quarter, however, fell 5.5 per cent on a quarterly basis to 3,187. But, this figure is 8.5 per cent higher compared with the quarter a year ago.
Low borrowing costs and booming house prices in recent years were the causes for such a situation, feel analysts watching the housing sector.
British households are totally holding more than a trillion pounds of debt. Experts say recent changes in bankruptcy laws have made people more willing to choose bankruptcy as a way out. Before April 2004, anyone declared bankrupt had to wait at least three years before getting discharged. Under the Enterprise Act (2002), this period has been reduced to just one year.
The government's Insolvency Service maintains that there was no link between the new bankruptcy laws and the rise in insolvency. A recent independent academic survey had shown that easier availability of credit, unemployment, and changing life styles such as divorce and ill health are contributing to insolvency, the service said.
Records indicated that about two-thirds of these people declared themselves bankrupt, while the rest took out individual voluntary arrangements (IVAs), an alternative to bankruptcy, which allows debtors to come to an agreement with their creditors for phased repayment and freeze on interest charges.
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Mortgage lenders' body say house prices will fall 