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Despite the recent 0.25% cut in base rates, which will reduce a typical £100,000 mortgage by £16 per month, people who are struggling will still feel the pressure. Banks are tightening their lending criteria amid the credit crunch, anyone who has existing large debts will see the cost of credit rising for them, instead of reductions in home loan bills they will feel the pinch even more.

Last year more than 27,000 houses were repossessed by banks and building societies last year, this is the highest number seen since 1999 when 30,000 houses were taken back by institutions.

The Council of Mortgage Lenders (CML) wants to highlight that this number is only a small fraction of the 75,500 people who saw their homes repossessed at the height of the UK’s last property recession. Despite this the CML is expecting to see this figure rise in 2008 as the economy continues to slow, fraudulent deals increase and the credit crunch tightens.

Despite the fact that the housing market has slowed from the end of 2007 there is still much activity below the surface. Usually house repossessions only rise when the market has been inactive for over a year, and anyone who has serious debts have to sell their way out of their debts.

House sales remained steady throughout most of 2007 and only tailed off towards the very end of the year, house sales in December are expected to be 1.05 million, which is only a very slight decrease from 2006’s 1.1 million. Halifax found that house prices in 2007 finished the year up 9.4%, this has been attributed to Scotland’s successful market.

Charcol mortgage broker, Ray Boulger said: “Despite recent interest rate rises, most home buyers are not currently at any risk of losing their homes. I suspect that those getting into difficulty now fall into a few groups who have over-committed themselves.

“There is also evidence of fraudulent activity, particularly in the area of new developments. It would take house prices to seriously dive before the bulk of the market has anything to worry about.”

Those who are most at risk of repossession are people who have excessive debts, lenders will repossess people’s homes if their debts are larger than the value of their property. As a result of swiftly increasing house prices over the last few years many people will not face this problem.

However, those who took a 100% mortgage and have fallen behind with payments remain in trouble, other people who many be in trouble are borrowers who began with modest loans and then took advantage of the equity in their property to fund car purchases, holidays or lifestyle choices.

According to the CML 129,000 borrowers have fallen more than three months behind with payments. Any borrowers with poor credit histories who are coming to the end of their affordable credit deals, may find it impossible to replace these agreements. This will mean they see payments increase and may struggle to meet these demands.

Despite the struggling market, mortgage deal demands from customers are still high, mortgage leads companies are still booming.

Many new properties have been overpriced and this has become apparent as the market has softened and the prices have tumbled, and fraudulent backgrounds to these price hikes have been revealed.

If a developer discounted a property by £50,000, for example, off a property selling for £200,000, the flat was still registered with the Land Registry for £200,000 even though the price paid was £50,000 less. This gave new buyers a false impression of the value of properties.

However there is some legislation called “Prevention of Homelessness Act”, and it protects residents of England and Northern Ireland.

The general gist of the legislation is that if someone does not have any were to live, the courts can suspend the eviction to allow time for the individual or person to find another place of residence.

The legislation also says that this does also apply to the circumstance of eviction due to mortgage repossession.

The application can be made by someone who is subject to eviction prior to action being taken

Were the home in question is inhabited as the persons only dwelling the court has the power to suspend the repossession process for any period that they see fit. The way the legislation is worded gives the judge a very open amount of power to do what they perceive as fare in the circumstances

The legislation stipulates that a court can decide to suspend the repossession for mortgage arrears or eviction for unpaid rent to prevent the person or persons residing there from “sleeping rough” or having to reside somewhere considered nor fit for inhabitation by humans

Another part of the legislation talks about variable rates of interest and gives power to the court to change the rate of interest that the individual is paying on the mortgage if that is a reasonable action to take to prevent the repossession taking place which would lead to someone being homeless.

There are some stipulations built in, however. The rate of interest that the court alters the mortgage to cannot be less than that applied by the UK federal Department for Work and Pensions

It also gives the court power to waiver any of the charges and fees or interest associated that may be a contributing factor to the repossession.

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