The Council of Mortgage Lenders (CML) has revealed that the number of properties repossessed by mortgage lenders rose by 12% in the third quarter of the year.

It has also revealed that the number of borrowers in arrears went up by 8%, and the number of repossession orders made by courts in England and Wales rose by 3% compared to the second quarter of the year.

The figures suggest that things are set to get worse, with more people losing their homes as the country falls into a recession.

Margaret Beckett, Housing Minister, has said that “the Government is taking action to protest the most vulnerable families from repossession… [This includes] a new court protocol to make sure lenders are exploring all avenues before making a claim in the courts, a £200 million mortgage rescue scheme, more free legal representation in county courts, and more free debt advice.”

With interest rates falling, and unemployment rates rising, it is not surprising that so many people are struggling to make their mortgage repayments.

Director General for the CML, Michael Coogan has said that the company still predicts 45,000 repossessions this year, but that trying to predict numbers for 2009 was “premature”.

He also said that it was generally not in the lenders’ interest to repossess properties, and that the Chancellor’s Pre-Budget Report needs to address.
“Conditions in the wider economy suggest a worsening picture for mortgage lenders, however carefully lenders handle their treatment of borrowers in difficulty.”

The CML’s figures also suggest that the buy-to-let market has also become tougher in recent months as arrears for the landlords of such properties are now generally higher than mortgage borrowers.

The CML have explained that: “Reasons include falling rents and an over-supply of rental property in some areas, resulting in some landlords being unable to let their property or achieve high enough rents to support their borrowing commitments…Fraud is also likely to have been a contributory factor.”

Figures also showed that in the third quarter of the year, the number of people behind on their BTL loans were behind by 1.58%, compared to 1.44% of mortgages.

The number of landlords who saw their properties repossessed in the third quarter of the year however, was exactly the same as in the first two quarters.

The CML has warned that this lower BTL repossessions rate is “unlikely to be maintained”.

Also released today were the Ministry of Justice (MoJ) figures, which showed the situation earlier in the repossession process when lenders first go to court for permission to take back a mortgaged property.

Figures for England and Wales shoe repossession claims in the first stage of being processed were 1% lower than in the previous quarter, but overall, 9% higher than the third quarter of last year.

The number of court orders being made by county court judges was up 3% over the quarter, putting them 24% higher than this time last year. However, an agreement is often reached between the lender and the borrower, so many of these cases will not end in repossession.

Chief economist for the Royal Institution of Chartered Surveyors (Rics), Simon Rubinsohn, has said that he doubts that the number of repossessions has peaked just yet. He believes that claims will rise as people lose their jobs and buy-to-let landlords face rising mortgage costs and falling rents.

Even though the number of repossessions is rising, it still does not yet compare to the last property slump in the early 1990’s.

Chief executive of Shelter, Adam Sampson has said that: “lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise.”