Mortgage possession orders and home repossession on the rise

This is the situation in UK:

The number of possession orders granted by courts in the third quarter of 2008 was noted to be on the rise, up by about 92% from a year earlier. These statistics were released by the Ministry of Justice. This amounts to a total of more than 13,000 possession orders. Possession orders are granted by the courts wherein lenders are granted legal control of a property by the courts. However, the owners need not necessarily be evicted from the houses. The Financial Services Authority (FSA) revealed that the number of householders three months behind with mortgage repayments had reached 340,000, a 24% annual increase and 10% up on the previous quarter.

Going by a region by region analysis, Wales was seen to have the highest repossessions level for eight years as homeowners continue to struggle with mortgage repayments. A total of 29,516 mortgage possession orders were issued in England and Wales on a seasonally adjusted basis with a steep increase of 4% on the last quarter. The credit crunch has led to more expensive repayments for new mortgages and a cut in the availability of deals. There was a 23% rise over the same period in the North West, and increases of 22% in the Midlands, 9% in the South East, 11% in the South West and 1% in the North East. The scene at the rental side has not been rosy either. There has been an increase in landlord possession orders reported in the County Courts as well. About 36,923 landlord possession claims were made, with 28,086 orders granted in the third quarter of 2008. This figure has risen 4% since the same quarter last year and shows that it is not just UK homeowners struggling with finances.

This worsening situation perhaps reflects on the mindsets of the lenders and homeowners. Banks and building societies were perhaps not doing well enough to keep the repossession figures down after pulling 100% mortgages from the market. The lenders have to take the responsibility in the sense that while retracting all the mortgages, they have not come out to help the thousands of people who are struggling paying off mortgages that they simply cannot afford. Missing mortgage repayments is also partly because of the rise of household bills owing to the increasing price of food and fuel. The homeowners are also partly responsible for these figures as some live beyond their means. By committing on a house which has a repayment value of more than what they can honestly afford, they inevitably run the risk of defaulting on payment, more so with the credit crunch in place. Homeowners should seek all possible advice before purchasing a property to avoid this predicament. The government can also help by offering free legal advice to those on the risk of having their properties repossessed. They can also urge lenders to seek other best alternative means before seeking a repossession order.

First – more and more house owners find it difficult to pay their instalments.
Second – more and more tenants find it difficult to pay their rents.
Third – banks lost the confidence on the real estate market, thus unwilling to lend money to home buyers.

It is yet to be seen here in Malaysia. But every party is cautious about the situation fearing that it will be out of control in 2009. As long as no major retrenchment, we shall be doing fine.