Home repossessions have risen by 30%

The Ministry of Justice said that 32,922 mortgage possession claims were issued by the courts – the first stage of the repossession process – during the second quarter of 2007.

Most mortgage possession claims do not end with a property being repossessed, mainly because the borrower presents the court with a case for not proceeding or the lender comes to an arrangement with the borrower.

Meanwhile, the CML said that it had changed the way it calculated repossession, to take greater account of sub-prime mortgage providers.

Therefore this may have boosted the CML’s estimate of the number of repossessions.

But according to CML director Michael Coogan, higher UK interest rates and the expanding sub-prime mortgage market are key factors in more people losing possession of their homes.

“Interest rates are clearly higher than many were expecting, and are set to remain so,” Mr Coogan said.

“The greater risks inherent in sub-prime lending are resulting in significantly higher levels of repossession in that part of the market compared to mainstream experience.”

However, Mr Coogan added that repossessions were still relatively low by historical standards..

“Overall, the vast majority of mortgage borrowers will continue to cope, even in a market where affordability is stretched,” he added.

Sub-prime mortgages are targeted at people with poor credit histories.

In the US, a high number of people defaulting on sub-prime loans has led to falling confidence in the housing market.

The UK government’s Insolvency Service has said that the amount of people going bust actually fell 8% in the second quarter of 2007 when compared to the first three months of the year.

Between April and June 26,956 people became insolvent.

Experts say the fall maybe due to lenders becoming less keen to accept Individual Voluntary Arrangements (IVAs), a type of insolvency.

In total, the number of IVAs fell 15% between the first and second quarters.