The number of people whose homes were repossessed last year has risen by 21%. The Council of Mortgage Lenders has reported that 27,100 homes were taken over by lenders after people fell behind with repayments. This is the highest figure for many years - 2006 saw 22,400 home repossessed compared to 8,500 in 2003. In addition there was a sharp rise of the number of mortgages in arrears - 8.6% compared to 2006.

The CML has warned that the number of repossessions is likely to rise again in 2008 with added pressure on homeowners with higher energy bills, food costs and more than a million people coming off fixed-rate mortgages. The rise in repossessions could also be down to the credit crunch with lenders taking fewer risk with borrowers who are already extending themselves.

Despite the latest rise in repossessions, figures are still much lower than the early 1990s when there were around 80,000 repossessions a year. The figures released by the CML came the day after many of the largest mortgage lenders announced they would pass on the 0.25% cut in interest rates onto their customers with the cut on the standard variable rate taking effect in early March.

http://news.bbc.co.uk/1/hi/business/7234254.stm

Relating to this, it is also reported that many homeowners use a credit card when they find they are unable to meet repayments. Credit card companies are now beginning to tighten up their credit conditions and only this week, Internet bank Egg announced they would be stopping the credit cards of around 160,000 high-risk customers which will affect around 7% of its two million credit card holders. Customers will receive letters in the next few days which will warn them that their credit cards will stop working in 35 days time and are being targeted mainly because they have had a "higher than acceptable risk profile".

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/02/cnegg201.xml

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