House prices keep falling, borrowers face the danger of falling into negative equity and the number of repossessions begin to rise.
The latest figures from the Financial Services Authority (FSA) show that half a million homeowners face repossession threat.
And the bad news continued as the Land Registry announced house prices in England and Wales continue to fall. Figures show the annual rate at which house prices in England and Wales are falling nearly doubled during September to hit a record of 8%.
The average value of a home dropped by a further 2.2% during the month to £168,814, according to the Land Registry.
The threat of negative equity grows
If the downward trend continues one in 10 home owners face the threat of negative equity, when the cost of their mortgage is worth more than the value of their home. A report from the Bank of England shows that 10% of home owners will owe more than their home is worth if house prices fall another 15% from the current level.
Increase in repossessions
A report from the Financial Services Authority (FSA) shows repossessions in the second quarter of 2008 were 71 per cent higher than a year earlier.
The government is demanding that mortgage lenders explore every avenue before repossessing.
Which? Money editor Martyn Hocking said ‘It’s all very well the government bailing out the banks to prevent financial meltdown, but it’s of little comfort to struggling consumers if the very same banks and mortgage lenders begin repossession procedures when borrowers run into trouble. We need legislation that protects struggling home owners and ensures mortgage lenders do not carry out repossessions too early.’
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