In January 2007 the Council of Mortgage Lenders announced that mortgage repossessions in the UK rose by 65% in 2006 to 17,000. With a predicted slowdown in the housing market and two interest rates rises in as many months, analysts are forecasting higher repossession rates into 2007 and 2008.

A 65% rise might sound dramatic but this does not tell the whole story. In fact, the current stats are still below the 15-year average, due to the high repossession rate at the beginning of the 1990s.

However, the situation in 2007 is very different to the early 90s for 2 reasons - 15 years ago interest rates peaked at 16% which made mortgage payments incredibly unaffordable for a large number of households. Secondly, house prices were falling, which meant that even if people managed to sell their house, it was not enough to pay off their mortgage payments.

Since then we have been blessed with the biggest housing boom in history, which has meant that homeowners have always had the option to sell their house to pay off mortgage debt. This will become increasingly difficult as the housing market slows.

So whilst repossessions are unlikely to return to 1991 levels, there is one additional factor that is worrying for the UK repossessions outlook - time lags.

It usually takes time for interest rate rises and housing market conditions to have an effect on repossession rates. This is due to 2 reasons: first, in the short term homeowners can usually make sacrifices in living in order to meet higher mortgage payments, but this becomes less sustainable as time goes on. Secondly, homeowners on fixed-rate mortgages don't feel the effects straight away, and only kick on once the fixed-rate period finishes.

The current 'worry factor' is that repossessions have increased before the time lag, indicating that the rise is not attributable to a rise in interest rates. The result? When these factors actually DO begin to take effect, repossessions are going to increase much further in 2007 and 2008.

Our experience dealing with sellers who need a quick house sale in order to stop repossession or get out of financial difficulties suggests that a much larger factor is homebuyers living beyond their means and getting into too much personal debt.

For those who find themselves in financial difficulties and do not want to resort to bankruptcy or taking out an IVA, there are a number of property companies who will buy your house and rent it back to you at an affordable rate. This allows you to quickly release the equity in your home, settle your debt and stop repossession before it is too late.

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