‘Sharp increase’ in repossessions forecast

There is likely to be a sharp increase in property repossessions in the UK next year, according to Ray Boulger, senior technical manager at the mortgage advisor John Charcol.

Mr Boulger suggests that homeowners who have borrowed under the terms of sub-prime deal will be particularly at risk of repossession when they reach the end of their existing arrangement.

Many sub-prime borrowers will be unable to find a new mortgage deal when their current one expires and under these circumstances debt management is likely to become increasingly difficult, the John Charcol spokesperson makes clear.

“Interest rates generally on sub-prime mortgages have shot up…and because a lot of lenders have restricted their criteria…there are going to be some people who will really struggle to get a remortgage,” he said.

“Unfortunately I think there is little doubt that there is going to be quite a sharp increase in repossessions next year.”

The Consumer Credit Counselling Service warned earlier this year that British homeowners would be “on the rack” financially throughout 2007.