Christmas a Risky Time for Homeowners

07/08/2007

The number of homes repossessed after their owners failed to maintain payments has escalated by almost 30 per cent during the first half of the year, according to new figures. Higher interest rates and the aftermath of the expensive Christmas party season are two contributory factors.

According to the Council of Mortgage Lenders, around 14,000 homeowners had their properties repossessed between January and the end of June. In the same period in 2006 the figure was 10,800.

Figures from the Government also revealed an increase in personal insolvencies during the second quarter of this year, with a 7.7% increase in the number of people declaring bankruptcy, compared with the same period in 2006.

Personal insolvencies, by contrast, were down on the first quarter of the year. This period usually sees the greatest number of consumers falling into debt problems, following the expensive Christmas party season. Quarter on quarter though, the number of people taking out Individual Voluntary Arrangements has dropped by a significant 15 per cent.

However, this is likely due to the tougher stance taken by the banks: in recent months they have started turning down IVA applications. Several of the UK's largest lenders have clashed with IVA providers, accusing them of advertising IVAs as an easy way of clearing debts accumulated during the Christmas party season and at other times.