Second charge repossessions ‘set to rise’

One form of mortgage could be about to become the subject of an increase in repossession statistics, the Finance and Leasing Association (FLA) has claimed.

While many people are dealing just with a first mortgage, some borrow using second charge mortgages – which secure further borrowing – and FLA members revealed that the number of repossessions arising from these turning sour fell in 2011.

The tally last year was 827, 4.3 per cent less than in 2010 and 48.7 per cent fewer than in 2008.

Head of consumer finance at the FLA Fiona Hoyle said: "Repossession levels have fallen for the third consecutive year as lenders continue with forbearance measures aimed at helping customers in financial difficulty to remain in their homes."

However, the body has predicted the number of these repossessions could be set to rise overall in 2012 and the 2011 statistics provide a reason to suggest such a situation will occur.

It revealed that the overall drop last year was entirely down to there only being 195 second charge repossessions in the first quarter – down by 67 (or 25.6 per cent) on the equivalent period in 2010.

However, when compared to the corresponding period in 2010, the other quarters saw more repossessions, with the tallies up by 1.7 per cent in the second quarter, 3.8 per cent in the third and 11.3 per cent in the final three months.

This may suggest an increasing number of homeowners with second charge mortgages may need to seek debt help or even an individual voluntary arrangement if they are to increase their chances of saving their homes.

Figures for all repossessions produced by Credit Action recently revealed that, based on trends seen in the third quarter of 2011, 101 properties are repossessed every day, the equivalent of one every 14 minutes and 17 seconds.