UK home repossessions at eight-year-high

Home repossessions last year hit their highest level since 1999 and are likely to increase, the Council of Mortgage Lenders said.

The trade group said more than 27,000 homes were repossessed last year and forecast repossessions would rise to a total 45,000 this year - still far fewer than the 75,000 homes that were repossessed in 1991 at the height of the last recession.

Economists expect a sharp rise this year as the global credit crunch bites.

"The financial pressure on many home owners is increasing," said Howard Archer from Global Insight. "It seems certain that repossessions will trend up significantly this year, particularly if the economy suffers an extended marked slowdown and unemployment starts rising."

Separate figures from the government showed mortgage repossessions in England and Wales rose an annual six per cent in the last three months of last year.

The mortgage lenders said 13,500 homes were repossessed in the second half of last year, marginally below the 13,600 in the first half and 10 per cent lower than they had forecast.

But the global economy now appears to be entering the slowdown presaged by the soaring rate of repossessions in the US that lead to the dismantling of complicated credit derivatives underwritten by mortgages.

The economy grew by around three per cent last year but is expected to expand by less than two per cent this year.