UK Mortgage Defaults To Double

The Times: Home repossessions to double this year for mortgage defaulters

Dearer mortgage costs in the log-jammed home loans market were blamed for a rise of almost 20 per cent over the past year in court orders allowing lenders to seize properties.

In a further sign of the growing financial distress, the number of new court actions started by lenders seeking repossession also leapt sharply. The latest survey from Halifax, the biggest mortgage lender, showed that average house prices dropped by 1.3 per cent in April, and are down by 0.9 per cent on levels a year ago.

Rising numbers of cheap, discounted properties being offloaded by lenders after repossession will only increase the downward pressure on prices, economists said.

Not all orders granted by the courts for lenders to take back homes from borrowers in financial trouble lead to actual repossessions.

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"The Market Oracle" article posted by Mick Phoenix, "UK Housing Market Surge In Mortgage Repossession Orders", the housing problem in the UK in the 1990s re-emerged in 2004 with a spike up in repossession orders.

In spite of rising prices over the past few years, the "reposession claims" spiked up signifiying home owners were strained by high household debt loads. The "properties taken into possession" did not follow the spike up in the repossession cliams could be attributed to home owners being able to unload their homes in a still bullish housing market. 

The UK housing market may follow the US housing market as UK too has to deal with excessively high prices, lack of affordability and excessively loose lending in the past.

At the sametime,  A blog posted by Mish's Global Economic Trend Analysis "Housing Hell in Spain and Oz" highlighted the housing troubles and falling prices in Spain and Australia.

The big question is with sky-high real estate prices in Vancouver, will falling prices in the US, UK and Australia affect home owners confidence here.