Home Repossessions Could reach 45,000 In 2008

The Council of Mortgage Lenders (CML) has warned that house prices will rise by just 1 per cent next year and there will be a huge rise in the number of homes repossessed.Up to 170,000 people are expected to struggle with their mortgage payments next year and 45,000 homes are expected to be repossessed as increases in interest rates hit those whose fixed-rate mortgage agreements are coming to an end.

CML director general, Michael Coogan, said: "The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago...We now expect a slower mortgage market next year, although by no means a stagnant one".

Further evidence of a "cooling" of the market came as The Bank of England said that the number of new loans approved for house purchase, as opposed to remortgaging or equity withdrawal, tumbled from 108,000 in August to 102,000 last month on a seasonally-adjusted basis.As well as being the lowest monthly total since summer 2005, the September figure was also way adrift of the total of 114,000 seen as recently as July this year.

Separate figures from the Bank showed that financial institutions charged borrowers an average of 5.94 per cent in September,the highest figure for nearly seven years and they have also withdrawn some of their most generous offers, making it more difficult for people to get a loan.