It says the programme, which costs £400 million a year, is unsustainable.

The Support for Mortgage Interest [...]]]> Mortgage lenders have raised concerns about potential changes to the way support is given to those struggling to pay their mortgage.The government is reviewing the Support for Mortgage Interest Scheme, where homeowners who lose their jobs may receive financial help.

It says the programme, which costs £400 million a year, is unsustainable.

The Support for Mortgage Interest (SMI) scheme, which helps people receiving some benefits, operates across the UK.

Under the SMI, those who lose their jobs receive financial help with mortgage interest payments. This comes 13 weeks after losing their job, a timescale previously cut from 39 weeks. However, the assistance only lasts for up to two years.

Chancellor George Osborne said in this year’s Budget that the scheme would operate until at least January 2013.

Support for Mortgage Interest is a UK scheme aimed at helping those with a sudden change of circumstances make mortgage payments rather than be thrown out of their home.

Some people on benefits are eligible and can receive help to make mortgage interest payments 13 weeks after losing their job.

Now Lord Freud, the minister for welfare reform, has launched a review of the scheme.

These changes could see a charge put on the property of anyone who receives the assistance, which is recovered when the house is sold.

The suggestion was welcomed by the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA).

Two other proposals have raised worries from the CML, which represents those who give home loans.

The first is a plan to make the payment to the homeowners themselves, rather than straight from the government to the lender. Lord Freud said the current system did not encourage people to get on top of their own finances.

The CML is also concerned that the qualifying period may return to 39 weeks after somebody has lost their job.

The BSA is calling for the amount received in SMI payments to reflect the actual rate the borrower is paying, rather than a set standard rate.

The temporary exemption meant first time buyers were free from the [...]]]> First time buyers will no longer receive an exemption from stamp duty from March 2012 as the government says the relief is “ineffective”.Documents with Chancellor George Osborne’s Autumn Statement reveal the view that the tax relief failed to get more people on the property ladder.

The temporary exemption meant first time buyers were free from the 1% stamp duty on homes costing under £250,000.

A lenders’ group described the decision as “disappointing”.

The Council of Mortgage Lenders (CML) said first-time buyers’ purchases could be bunched up at the start of next year before the concession is scrapped on 24 March.

The documents show that the Office for Budget Responsibility (OBR) believes that the UK housing market will remain relatively stagnant.

It predicts that, even without the relief for first-time buyers, stamp duty land tax receipts will only grow marginally from £6bn in 2010-11 to £6.4bn in 2012-13, before rising more sharply to £7.5bn in 2013-14, and accelerating to £11.4bn in 2016-17.

Stamp duty thresholds

• 1%: Properties of £125,000 to £250,000, but first-time buyers are currently exempt
• 3%: £250,000 to £500,000
• 4%: More than £500,000
• 5%: More than £1m, residential property only

In the Autumn Statement documents, the government said: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first time buyers entering the market.

The government’s housing strategy, announced earlier in the month, included a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes.

Paul Smee, director general of the CML, said: “While the stamp duty concession may not have stimulated additional demand, it was a significant help to home-owners entering the market and its removal runs counter to the themes of the new housing strategy.

“It is likely that we will see a bunching of eligible first-time buyer transactions early next March to beat the expiry date on the concession.”

The National Association of Estate Agents (NAEA) said [...]]]> First time buyers are “rarely seen”, estate agents warn with their share of the UK housing market having fallen to a three year low.Sales to those buying their first home fell from a 22% share of the market in September to a 16% share in October, figures suggest.

The National Association of Estate Agents (NAEA) said this was the lowest proportion since December 2008.

One economic research company has also scaled back its price growth forecast.

The level of sales and homes going on the market in the UK was little changed in October compared with September, according to the NAEA.

However, it said that first time buyers had suffered a “heavy blow” to their share of the overall housing market.

The association said that, despite some evidence of mortgages being approved by banks, there remained significant lending barriers for those trying to buy their first home.

“The first time buyer is rarely seen as they struggle to get mortgages and over-optimistic vendors with a lack of motivation continue to stifle certain areas of the market,” said Martyn Baum, who represents the NAEA in the Midlands.

It still believes that house prices will rise from next year.

The research company also said that the government’s housing strategy could initially push up prices slightly but would have no effect on values after the first year.

That figure represented a [...]]]> Mortgage lending in Scotland rose in the third quarter – but at a much lower rate than the UK as a whole, according to the latest data released by mortgage lenders.The Council of Mortgage Lenders (CML) Scotland said 12,400 loans were taken out, which was 900 more than in the previous quarter.

That figure represented a rise of 8% for the period.

In the UK as a whole, lending for house purchase increased by 16%.

Loans to first time buyers and home movers in Scotland increased in the third quarter.

A total of 4,600 loans worth £429 million were advanced to first time buyers, which was a rise of 7% by volume and 10% by value.

CML Scotland said there were “small improvements” in lending criteria for all Scottish house purchasers in the quarter.

First time buyers typically borrowed 80% of their property’s value, up from 79% in the second quarter – bringing the average loan-to-value ratio in Scotland in line with the UK average.

Home movers borrowed on average slightly less of their property’s value from July to September than April to June – 70% compared to 71% – but they spent 8.8% of their income on mortgage interest payments, the lowest since records began in 2005.

A total of 9,600 remortgage loans worth £900 million were taken out, a 5% increase on the previous quarter.

CML Scotland policy consultant Kennedy Foster said: “The mortgage market in Scotland is currently stable, albeit at a low level.

“We anticipate growth is likely to remain slow going forward, although welcome developments – such as smaller deposits – have emerged and a Scottish mortgage indemnity scheme for new-build properties is being introduced.

“The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland, as in the UK in general.”

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been [...]]]> Mortgage interest rates could start to rise again as a result of the turmoil in the eurozone brokers are warning.Some lenders, including Woolwich, Halifax and Santander, have pushed up their tracker rates for new borrowers.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been inching higher amid worries over the eurozone crisis.

The increase in Libor indicates that banks are less confident about lending to each other.

Although the average tracker rate has hardly altered since the summer, there are straws in the wind which suggest that the direction could be shifting from down to up.

On Wednesday, the Chelsea Building Society put up the cost of some of its most competitive tracker mortgages by 0.2%.

In recent weeks, the Halifax raised its two-year tracker by 0.15% to 3.34%, while Woolwich increased the rate its trackers revert to after two years by 0.4%.

Santander pushed up its Abbey-branded lifetime tracker in two moves from 2.95% to 3.09%. Nationwide and ING have also raised some rates as well.

One indication of the pressure on lenders comes from Libor – the London Interbank Offered Rate – the short-term interest rate at which banks will provide funds to each other.

While some lenders draw mostly on their customers’ savings to fund mortgages, others have to borrow large amounts on the money markets, hence the importance of rates such as Libor.

Since August, three month sterling Libor has risen from 0.83% to 1%.

This is a significant change compared with the Bank of England’s key rate, which has been stuck firmly at 0.5% since March 2009. On Thursday, the Bank said it would keep rates on hold again following the latest meeting of the Monetary Policy Committee.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating [...]]]> UK house prices rose by 1.2% in October compared with September, but have fallen over the last year according to the Halifax.The lender, part of nationalised Lloyds Banking Group, said that values had fallen by 1.8% compared with a year ago.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating outlook for the UK economy.

The average home in the UK was valued at £163,311, the Halifax said.

Its house price survey is based on its own mortgage data.

The Halifax said that there was a 0.3% fall in prices in the three months to the end of October compared with the previous quarter. This was the first time this measure has recorded a fall since June.

Martin Ellis, Halifax’s housing economist, said that this was an indication of the general stability of prices, despite the month-on-month figures having shown some volatility during the year.

“The housing market has proved highly resilient in recent months, despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies,” he said.

“The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.

“Both prices and activity levels are expected to remain close to current levels over the coming few months.”

The survey’s findings are similar to the picture painted by the Nationwide Building Society. A week ago, it said that UK house prices were “treading water”.

The Nationwide said the annual change in October was a 0.8% rise.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

But over the third quarter of the year total lending was 15% higher than in the second quarter, [...]]]> Mortgage lending is still subdued according to the latest figures from the Council of Mortgage Lenders (CML).Total lending stood at £12.9 billion in September, which was 2% lower than in August but 4% up on September last year.

But over the third quarter of the year total lending was 15% higher than in the second quarter, while still 2% down on a year ago.

The CML warned that lending might turn down again in the coming months.

“The housing market is very sensitive to wider household confidence, and this seems likely to weaken over the coming months in response to the latest spike in consumer prices and headline unemployment figures,” said the CML’s chief economist Bob Pannell.

“What is becoming clear however, is that lenders are increasing their product pricing, in one case upping their standard variable rate, due to increases in funding costs,” he said.

“It therefore seems that we are now passing the nadir for mortgage rates which may spur some customers to take action before these historically low products disappear.”

The latest quarterly Bank of England publication Trends in Lending contains a warning that mortgages may become more expensive if banks continue to find it hard to raise fresh funds on the wholesale financial markets.

“Funding costs for wholesale debt had increased according to some major UK lenders, which they reported primarily reflected concerns about the vulnerabilities associated with the indebtedness of several euro-area governments and banks,” the Bank said.

“Lenders noted, however, that if current conditions in term wholesale funding markets did not improve then higher funding costs were likely to be passed through to loan pricing in the coming months.”

Prices for the three months to September compared with the previous quarter were unchanged.

Market turmoil [...]]]> House prices continued to “tread water” in September – rising by 0.1% compared with the previous month the mortgage lender Nationwide said.This left the average price of a home 0.3% lower than a year earlier, at £166,256, the building society said.

Prices for the three months to September compared with the previous quarter were unchanged.

Market turmoil as a result of the eurozone debt crisis had hit confidence among buyers, Nationwide said.

“Sentiment towards major purchases is depressed, as a result of weak labour market conditions and ongoing pressure on household budgets from above-target inflation,” said Robert Gardner, Nationwide’s chief economist.

He predicted that property prices would remain fairly stable over the rest of 2011, although the outlook for the global economy had “darkened”.

The struggle for people to find new jobs has resulted in “sluggish demand” from potential buyers.

That, together with a gradual rise in the number of properties on the market, had led to the current market conditions.

Some of these issues are most acute in the north east of England.

Many of the properties coming onto the market were the result of repossessions. These included repossessed properties from landlords who had overstretched themselves.

This meant there were some two bedroom homes in need of some work that were on the market for £20,000.

Many properties were selling if prices were lowered, however dropping prices was not necessarily an option for some sellers though.

Those who bought at the peak of the market may well have borrowed more than the property is now worth with negative equity.

More surveyors reported price falls than price [...]]]> Economic uncertainty and a lack of mortgage lending led to the sluggish housing market, the Royal Institution of Chartered Surveyors (Rics) said.Fourteen homes were sold per UK estate agent in the three months to August – the lowest total for more than two years, a survey has found.

More surveyors reported price falls than price rises in August, Rics said.

And an increasing proportion expected prices to drop further in the next three months.

“The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available,” said Alan Collett, housing spokesman for Rics.

The Rics report reported that surveyors regarded economic uncertainty as the biggest factor affecting activity in the housing market, followed by a lack of mortgage finance.

A smaller number considered that buyers and sellers were staying away from the market because of fears over further house price falls.

The Council of Mortgage Lenders said last week that first time buyers were typically having to find a deposit of 20% of the purchase price to get a home loan.
School effect

House prices in year to July

• Wales: down 0.1%
• England: down 1.5%
• Scotland: down 1.8%
• Northern Ireland: down 4.1%

Source: Department for Communities and Local Government

Often this was because they had bought at the height of the market, had found it easy to get a 100% mortgage, but now needed a bigger home having had children or found a partner.

Nationally, Rics said that prices continued to increase in London, with prices falling the most in East Anglia and the West Midlands. Scotland and Northern Ireland also recorded house price falls, the survey said.

In the last year, prices have fallen the most sharply in Northern Ireland (down by 4.1%), according to the government’s own house price survey.

Property prices fell by 1.8% in Scotland in the year to July, and dropped by 1.5% in England and 0.1% in Wales, the Department for Communities and Local Government (DCLG) said.

It said that UK house prices fell by 1.5% over the year to July.

However, it said prices rose by 0.3% compared with June, making the average home worth £207,690.

Prices paid by first-time buyers were 0.5% lower on average compared with a year earlier and prices paid by former owner occupiers decreased by 1.9% over the same period.

The number of first-time buyers, at 18,200, fell back by [...]]]> The number of mortgages lent in July was still much lower than a year ago, figures from the Council of Mortgage Lenders show.The number of new loans to house buyers was 48,400 in July, up 1,000 from June but still 6,900 lower than a year ago.

The number of first-time buyers, at 18,200, fell back by just 300 from June and was 1,300 down on a year ago.

First-time buyers are still having to put down deposits averaging 20% of their purchase price to obtain a loan.

“August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months,” said the CML’s director general Paul Smee.

“However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages,” he said.

Figures from the Bank of England showed that in July 49,239 new mortgages were approved, but not yet lent, to house buyers. That represented the third monthly increase in a row and would normally suggest an impending upturn in sales.

With house prices rising slightly so far this year, the average new mortgage has gone back up to £120,000, the CML said.

As a result, the total amount of money involved in the new loans in July rose to £7.3bn from £6.9bn in June, putting gross lending at its highest level since August last year.

Mortgage rationing in the past few years has led to home sales [...]]]> The number of mortgage deals available has returned to the level of early 2008, before the banking crisis reached its peak.Of the 2,557 mortgage types on offer, 64% require at least a 20% deposit and only 2% need a deposit of 5% or less.

Mortgage rationing in the past few years has led to home sales falling by more than half.

Moneyfacts, which compiled the figures, said lending to people with small deposits was still very restricted.

“While the number of deals for borrowers with a 5% deposit or less has increased, the majority require a guarantor to qualify or are from lenders which offer restricted lending,” said Michelle Slade of Moneyfacts.

“First-time buyers still really need at least a 10% deposit before they can find any real mortgage options.”

She said lenders were worried about borrowers defaulting if interest rates rose, and were concentrating their lending on people who could put down at least a 25% deposit.

Severe mortgage rationing has been in place since 2008, when banks and building societies decided to restrict their lending because of the financial crisis.

The knock-on effect has been that people who would normally be regarded as highly creditworthy have been having problems obtaining a loan to buy a home.

Despite a clean credit history, several lenders are rejecting home loan applications.

As a result the mortgage decision making  process is getting slower and slower. Previously mortgages were agreed in six days or so now the process can take up to three months.

The CML has predicted that a total of [...]]]> Low interest rates have kept the level of UK mortgage arrears and home repossessions steady according to the Council of Mortgage Lenders (CML).A total of 9,000 homes were repossessed in the second quarter of the year – 100 fewer than in the previous three months, the CML said.

The CML has predicted that a total of 40,000 people will lose their homes this year, up from 36,300 in 2010.

It said its view remained unchanged despite turbulence in the markets.

The Bank of England has held its Bank rate at 0.5% – a record low – for more than two years.

This has assisted mortgage holders who may have faced difficulty in keeping up with their monthly payments otherwise during a period out of work or as they face other financial pressures, such as rising energy bills.

The total number of mortgages in arrears was broadly unchanged in the second quarter of the year, the CML figures show.

The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance edged up from 77,800 in the first three months of the year to 78,500 in the second quarter.

Those in arrears of more than 2.5% of the balance declined from 166,700 to 164,500 over the same period.

The number of householders who have lost their homes owing to mortgage payment difficulties was 7% lower in the first half of 2011 compared with the first half of 2010, and 28% down on the first half of 2009.

“Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates,” said CML director general Paul Smee.

The CML has predicted that the number of repossessed homes will rise to 45,000 in 2012.

“Despite current uncertainty in financial markets, we see no need to revise our forecasts. Anyone with debt worries should take advice and speak to their lender at the earliest opportunity, as most temporary financial problems can be resolved,” Mr Smee said.

Debt advisers said the continued willingness by banks to show leniency to people struggling to meet their mortgage payments had helped to keep the numbers of repossessions down.

And in June, Bank of England governor Sir Mervyn King said that when there was an increase in the Bank rate, there would be a delay in it feeding through to other borrowing costs.

Housing Minister Grant Shapps said: “The worst thing anyone struggling to pay their mortgage can do is bury their heads in the sand hoping the problem will go away. No one in financial difficulty should be embarrassed to seek help if they need it.”

The society said demand for homes was still sluggish, and a gradual rise in the supply of available houses was keeping prices [...]]]> House prices are stabilising, according to the latest monthly report from the Nationwide building society.Prices across the UK rose by 0.2% in July, to £168,731, leaving them just 0.4% lower than a year ago.

The society said demand for homes was still sluggish, and a gradual rise in the supply of available houses was keeping prices stable.

Although prices are almost the same as they were a year ago, since July 2010 they have fallen and then recovered, according to the Nationwide’s measurement.

Completed sales are still running at roughly half the level recorded before the banking crisis. Since December 2010, the average house price, not seasonally adjusted, has now gone up by 4%.

Economists often argue that the best guide to short-term trends is to compare the average price over the last three months with that of the previous three.

The Nationwide says that on that basis, prices have risen by just 0.3%.

The building society’s chief economist, Robert Gardner, said this stability reflected the “uncertain” state of the economy.

“House prices remain relatively high compared to incomes and, together with more demanding deposit requirements, this is dissuading, or at least delaying, some first-time buyers from entering the market,” he said.

For the first six months of the year, total mortgage lending was only slightly [...]]]> Mortgage lending picked up in June but was still lower than a year ago the Council of Mortgage Lenders (CML) say.Total lending to home owners was £12.9 billion last month, up by 16% from May but 3% down on June last year.

For the first six months of the year, total mortgage lending was only slightly down on last year’s figure, at £63.7 billion.

The CML said the subdued state of lending reflected the poor state of the economy and household finances.

“The UK economy continues to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market,” said the CML’s chief economist Bob Pannell.

“Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future.

“But we do expect to see moderately higher arrears and possessions through the second half and into 2012, as we have previously forecast,” he added.

The financial information service said that availability was rising for those offering a deposit of just 10%.

But [...]]]> The number of different mortgage products available in the UK market has risen to the highest level since November 2008, figures show.The increased competition has contributed to falls in the interest rates for new mortgage deals, according to Moneyfacts.

The financial information service said that availability was rising for those offering a deposit of just 10%.

But there has been no return of the pre-banking crisis deposit-free deals.

Only a handful of mortgages remain on the market for those offering a deposit of less than 10%, and they often have other restrictions attached.

However, there has been a rise in the number of mortgage products at the 10% deposit level, from 176 a year ago to 261 at the start of July.

However, banks remain strict about who they lend to – such as checking applicants’ credit history.

The largest category of a total of 808 mortgage products still require a deposit of 25%.

The increased availability has created more competition which has helped reduce the cost of home loans.

A week ago, Moneyfacts reported that interest rates on new mortgage deals had fallen to their lowest level, on average, in 23 years.

The average two-year fixed rate deal were at 4.32%, three-year fixed deals now averaged 4.92%, five-year fixes were at 5.29% and the average two-year tracker deal was now at 3.37%, it said.

Households have now [...]]]> UK Homeowners added £5.8 billion into their properties in the first quarter of 2011- marking three years in which they have injected equity, according to the Bank of England.The Bank’s economists think that while some people may be trying to cut debt, the shift to equity injections more likely reflects falling house sales.

Households have now added £63.6 billion to their housing equity – the share of their housing wealth that does not have lending secured on it – since March 2008.

The latest net injection followed a record £7.1 billion the previous quarter.

In contrast, the housing boom years saw a trend for equity withdrawal, as many cashed in on the value of their property by using at as security to borrow and spend.

There is concern that, just as withdrawals supported spending, injections – such as lump sum payments on the mortgage principal – could have a reverse effect.

The shift has often been attributed to households’ desire to shore up their finances.

However, Bank economists think that, while some people may be trying to cut debt, the shift more likely reflects falling house sales.

The overall effect of a housing chain of buyers and sellers would normally be an equity withdrawal, since the equity injected by a first-time buyer is typically “dwarfed” by the withdrawal made by the person at the end of the chain.

“Fewer homeowners trading down and selling a property without buying another mean that a large source of equity withdrawal has disappeared,” a Bank report noted.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above [...]]]> Interest rates on new mortgage deals have fallen to their lowest level for 23 years since 1988, according to new research.
This is due to lenders finding it cheaper to raise funds in the wholesale financial markets.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above 0.5% anytime soon.

However most mortgage deals still require buyers to put down at least a 20% deposit.

The intra bank swaps rate determines the cost of borrowing for banks and building societies when they want to borrow longer term money in the financial markets at a fixed rate to lend onto their customers.

The market provides an indication of when banks expect the Bank of England to raise short term interest rates.

Until recently, a rate rise had been expected as soon as September.

But following a set of weak economic data, as well as the decision by a new member of the Bank’s rate setting committee to vote for no change in rates, markets now do not expect a rate rise until well into next year.

According to Moneyfacts, the average two-year fixed rate deal is now at 4.32%, three year fixed deals now average 4.92%, five-year fixes are at 5.29% and the average two-year tracker deal is now at 3.37%.

More than 40% of mortgage borrowers are now on standard variable rates- which generally start after cheap introductory mortgage deals [...]]]> The consumer group Which? has accused banks and building societies of raising interest rates on homeowners who have standard variable rate mortgages.
Which? warns that thousands will be pushed into financial difficulty when interest rates go up.

More than 40% of mortgage borrowers are now on standard variable rates- which generally start after cheap introductory mortgage deals expire.

The highest are around 6%- double the cost of the best value mortgages.

Which? research suggested that 95% of lenders had failed to pass on cuts to standard variable rate customers in full when the Bank of England reduced interest rates.

Examples of standard variable rates (SVRs)

• Newcastle BS: 5.99%
• Birmingham Midshires: 4.84%
• Clydesdale: 4.59%
• Natwest: 4.00%
• Royal Bank of Scotland: 4.00%
• Nationwide: 3.99%
• Halifax: 3.99%
• HSBC: 3.94%

Source: Moneyfacts

Since then, 20% of lenders have actually put their rates up, while the Bank’s rate has stayed at a record low of 0.5%.

The Council of Mortgage Lenders said that the standard variable rate, or SVR, is dependent on the cost of attracting deposits from savers, rather than the Bank of England.

But its director general, Michael Coogan, said that lenders have been widening their profit margins after losing heavily during the crisis.

An increasing number of families with large loans are trapped on their lender’s standard variable rate because other banks and building societies don’t want their business.

These financially stretched households could suffer badly when the Bank England starts to push interest rates higher.

Shelter said the worst blackspot for repossessions was in Corby, which had the highest rate of “at risk” homeowners – [...]]]> 60 repossession hotspots are revealed in a report by housing charity Shelter.Corby in the east Midlands is named the place with the highest proportion of homeowners at serious risk of losing the roof over their head.

Shelter said the worst blackspot for repossessions was in Corby, which had the highest rate of “at risk” homeowners – 7.56 per 1,000, nine times higher than the lowest rate in West Dorset of 0.83.

It was closely followed by Barking and Dagenham (6.62 per 1,000), Thurrock in Essex (6.16 per 1,000), Knowsley in Merseyside (5.68 per 1,000), and Newham in London (5.57 per 1,000).

Shelter warned that the figures reflected a need for homeowners across the country to prepare for higher mortgage repayments if interest rates rise as expected later this year.

Repossessions rocketed by 15% in the first quarter of the year, and the charity has found that unemployment rose by 3.3% on average in local authority areas with the highest levels of repossession orders. In comparison, unemployment rose by an average of 1.4% in areas with the lowest rates of repossession.

Shelter analysed Ministry of Justice figures for repossession orders in the first three months of the year to identify the hotspots, with most grouped across the north of England, around the Wash, and the east of London leading out to the north Kent and Essex coast.

Other hotspots include:
• Fenland, next to the Wash (5.04 at-risk homeowners per 1,000)
• Harlow in Essex (4.85 per 1,000)
• Manchester (4.63 per 1,000)
• Peterborough (4.57 per 1,000).

However, Corby confounds the trend: while it is England’s top hotspot for repossession orders, unemployment is relatively low at 6.4%, rising by just 0.9% in the thee years to last September.

Lenders have faced heavy criticism for enabling ill-disciplined and inexperienced borrowers to take on too much debt.

But Shelter’s findings indicate that the root cause of people losing their homes is loss of income through reduced earnings and unemployment.

Shelter’s findings are supported by data from the Consumer Credit Counselling Service, which advises struggling debtors. Of the mortgage borrowers calling the CCCS for help with their debts last year, 19% were unemployed, 28% were suffering reduced income and just 8% were over-committed on credit.

Lenders applied for a total of 13,520 repossession orders in England from January to the end of March – a rate of 0.73 claims per 1,000 households – while unemployment rose by 2.9% to an average of 7.8% during the three years to September 2010, according to the latest unemployment figures by local authority published by the Office for National Statistics.

Although the unemployment rate dropped slightly in England to 7.7% for the three months to April, it is expected to rise sharply later this year as public sector job cuts feed through, with a further rise in repossessions anticipated.