The committee cited a sharp deterioration in the international outlook as a key factor.

The vote [...]]]> The Bank of England’s Monetary Policy Committee (MPC) was unanimous in voting for another £75 billion of quantitative easing (QE) to support the weak UK economy.Minutes from the MPC’s meeting earlier show members considered injecting between £50 billion and £100 billion.

The committee cited a sharp deterioration in the international outlook as a key factor.

The vote for more QE marked a sharp turnaround in the members’ positions.

At the previous meeting in September only one MPC member, Adam Posen, had pushed for more QE.

All members voted to keep interest rates unchanged at their record low of 0.5%, despite inflation running well above the 2% target rate.

Figures released on Tuesday showed consumer price inflation rose to 5.2% last month.

The MPC’s minutes showed that the committee was expecting inflation to be above 5% in the near term, boosted by increases in energy prices.

But its view is that domestically generated inflation had remained contained and would fall back next year.

In a speech on Tuesday evening, the governor of the Bank of England, Mervyn King, said inflation would fall sharply in 2012 when the January 2011 rise in VAT dropped out of the data and the effect of past oil price rises started to fade.

The MPC minutes echoed this, saying that there was “little further upside news” on the outlook for inflation. In fact, the Bank was more concerned that without extra QE, that could fall below target.

They also pointed out that financial markets were trading on the expectation that UK and US interest rates would remain unchanged for two years.

The MPC said it did not expect the impact of this round of QE to be materially different to the £200 billion of purchases made between March 2009 and February 2010.

A Bank report into the effect of the first round of QE found the stimulus measure helped gross domestic product increase by about 1.5% to 2%

The terms of the [...]]]> Iceland’s parliament has voted to approve a new plan to repay the UK and the Netherlands the £3.1 billion they lost when the Icesave bank collapsed.
The money will be used to repay the UK and Dutch governments for reimbursing 400,000 citizens who lost savings when Icesave’s parent, Landsbanki, collapsed late in 2008.

The terms of the agreement must now be approved by Iceland’s president- who has recently said that this deal was much better than a previous deal.

He had refused to approve the last parliament backed repayment proposal.

Under the terms of the latest deal Iceland will have longer time to repay the debt, and at a lower interest rate than before.

Iceland will pay the money back to the UK at a 3.3% interest rate between 2016 and 2046, rather than a 5.5% interest rate between 2016 and 2024.

The actual cost to the state is expected to be much less than the £3.33 billion euros owed, as the government says most of the repayment will come from selling the assets of Landsbanki.

The Netherlands and UK agreed to reimburse account holders in their countries and the Icelandic parliament agreed to the terms of a repayment deal in December 2009.

A referendum in Iceland overwhelmingly voted down the plan in March 2009, with the majority saying they, as citizens, should not be made to pay so much for their banks’ bad decisions.

Late last year, the UK, Netherlands and Iceland agreed a new deal, pending approval by the Iceland parliament and president.

The issue of repayments created a diplomatic row between Iceland and the UK, as well as political controversy in Icesave’s home country. It also created uncertainty over Iceland’s economic recovery.

The findings by property websites Trulia and [...]]]> 58% of Americans expect the US housing market to stay depressed for two or more years, a new survey has suggested.
Even worse- in the survey, 48% of respondents said they would consider walking away from their mortgage if they were in negative equity – up from 41% since May.

The findings by property websites Trulia and RealtyTrac come as house prices have begun falling again.

They suggest the market may face a new wave of mortgage defaults as Americans lose respect for scandal-hit banks.

The attorneys general of all 50 US states are carrying out a joint investigation into foreclosures – the repossession of US homes by mortgage lenders – after it emerged that unqualified “robo-signers” had been used to produce fraudulent documentation to present to US courts.

“As a result of the recent robo-signing debacle, half of US adults expressed that they now have less faith in mortgage lenders, banks and the government,” the two companies said in a statement presenting their report.

The two real estate websites themselves were even more pessimistic than their survey respondents, predicting that the housing market would recover only in 2014.

Four providers have been ordered to “address concerns” about the way some consumer [...]]]> Some people are being forced to put their homes at risk because of debts of as little as £600, the Office of Fair Trading (OFT) has found.
The regulator is clamping down on lenders who tell customers to pledge their homes against unsecured debts.

Four providers have been ordered to “address concerns” about the way some consumer debts are enforced.

In a minority of cases across the industry, lenders sent “oppressive and misleading” paperwork to borrowers.

The process of securing these debts is known as a charging order.

Financial companies have the right to apply to a court for a charging order when borrowers have failed to keep up payments on credit card debt, loans or hire purchase commitments.

This order turns these unsecured debts into debts secured on the borrower’s property.

Over the last five years, the number of charging orders applied for has risen from 45,000 to 164,000.

Only a relatively small proportion of orders lead to people being forced to sell their homes.

“‘Our investigation uncovered instances of charging orders being used to secure debts of less than £600. Lenders are entitled to use charging orders but must do proportionately,” said Ray Watson, the OFT’s director of consumer credit.

“Where we consider the using of charging orders to be unfair or oppressive we will take action to protect consumers.”
‘Pressure’

The OFT has told four offshoots of major lenders to address the way they use orders.

The four are: Alliance and Leicester Personal Finance, HFC Bank – part of the HSBC group, American Express Services Europe, and Welcome Financial Services – part of Cattles.

Each of the four co-operated with the OFT during the investigation, and have made changes to address the problems identified, the regulator said.

In general, during the investigation of the whole sector, the OFT found that some providers failed to consider the customer’s circumstances, applied substantial charges for bringing in debt collection agencies, and did not have adequate checks in place during lenders’ decision-making process.

The bank, 84% owned by the tax payer, had appeared to be on the [...]]]> Royal Bank of Scotland has plunged back into the red with a £1.4bn pre tax loss during the three months to September.
RBS blamed the loss on changes to the “fair value” of its own debt, but said it was making “tangible progress”.

The bank, 84% owned by the tax payer, had appeared to be on the mend after it reported a profit of £1.15bn for the previous three months.

Chief executive Stephen Hester said the bank was making “good progress in our recovery”, but that highly volatile accounting charges could “obscure our underlying story”.

RBS said while bad debt provisions were improving, changes to the “fair value of own debt” had caused the losses.

The bank’s share price dropped sharply on the news, ending the day down 4.5% or 2.14 pence at 45p, making it the day’s biggest loser on the FTSE 100 index.

Since October 2008, the bank has announced 23,000 job losses worldwide, including 17,100 in the UK.

RBS led a consortium that bought Dutch bank ABN Amro before the credit crunch in 2007, but the deal was a disaster, weakening its balance sheet and forcing the labour government to nationalise the bank and pump in about £45bn to keep the bank afloat.

The government paid an average of 50.2 pence for each of the 90.6 billion RBS shares it bought to save the bank from collapse. .

There are not thought to be any government plans to sell its stake in either RBS or Lloyds any time soon – both in the hope of making a larger profit as the bank continues to strengthen and the feeling that such a move could threaten the fragile banking recovery.

Letting agents are generating a disproportionately high number of the enquiries made to the Ombudsman. [...]]]> The Property Ombudsman, Christopher Hamer, has repeated his call for all letting agents to be part of a formal redress scheme, like estate agents.
Mr Hamer said this would give private tenants and landlords greater protection in a dispute with an agent.

Letting agents are generating a disproportionately high number of the enquiries made to the Ombudsman. But in June the coalition government scrapped Labour’s plans for stiffer regulation of the letting industry.

Labour had planned to introduce a landlords’ register and new regulation of letting agents.

These ideas were abandoned by the Housing Minister Grant Shapps, who said most tenants were happy with the service they were receiving from agents and that the existing regulatory set-up was satisfactory.

However, in his latest half-yearly report, Mr Hamer suggested this was not the case.

“More and more people will be looking to the private rented sector for their housing needs, whether because they cannot get financing to buy a property or because government cuts will possibly impact on the availability of public sector housing,” he said.

“It is now more than ever imperative that consumers in the private rented sector gain some protection,” Mr Hamer added.

Mr Hamer pointed out that many letting agents, with 7,756 offices between them, are already voluntary members of his redress scheme and agree to abide by his code of practice.

In the event of a complaint or dispute, they can be asked to pay compensation of as much as £25,000 to a tenant.

The Property Ombudsman’s scheme is an official redress scheme under the 2007 Consumers, Estate Agents and Redress Act.

But while membership of such a scheme, which has been approved the Office of Fair Trading, has been compulsory for estate agents since October 2008, there is no such compulsion for letting agents.

The number of loans approved for those buying a [...]]]> Home owners have so little equity left in the homes after the credit crisis that they are struggling to remortgage, experts warned.
The latest lending statistics suggested the number of people who remortgaged their homes in June was just 27,000, down 20 per cent on a year earlier.

The number of loans approved for those buying a new home rose 19 per cent in June on the previous month, according to the Council of Mortgage lenders, but experts said it was not unusual for the summer months.

Lenders are cherry-picking borrowers who have the largest deposits amid a backdrop of rising repossessions.

First-time buyers currently pay a typical deposit of more than £35,000, separate research from Nationwide suggested earlier this week. It is a significant increase from the average deposit of £1,300 required 25 years ago.

House prices recovered some lost ground during the past year amid a shortage of supply of suitable properties. However, they remain below the levels seen before the credit crisis began in August 2007.

Paul Samter, an economist at the CML, said: “For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory.

“But we still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government’s austerity measures and their possible impact.”

Concerns about the economic outlook have helped to spur Britons to put more money aside every month, according to National Savings & Investments.

People are now typically saving £85.21, up from £81.94 in the last quarter, it said.

Home owners are particularly vulnerable if interest rates go up as they would be likely to see a sharp increase in their monthly mortgage payments.

Figures show that the number of homes repossessed dropped from 10,600 in the last three months of 2009 to 9,800 in the first quarter of 2010. This was also lower than the 13,200 of the same [...]]]> The number of homes repossessed in the UK fell by 7.5% in the first three months of 2010, according to lenders.

Figures show that the number of homes repossessed dropped from 10,600 in the last three months of 2009 to 9,800 in the first quarter of 2010.
This was also lower than the 13,200 of the same period a year ago, the Council of Mortgage Lenders (CML) said.

But many homeowners remained vulnerable to falling into arrears, the CML said.

It added that it could revise its forecast of 53,000 repossessions in 2010 in the summer, describing it as “pessimistic” if there are no further economic shocks.

The number of homes repossessed was at its lowest in two years, down 7.5% on the previous three months and 26% lower than the first three months of 2009.

Low interest rates were the key to the dropping figures, allowing people – even those who have lost their jobs – to stave off the threat of repossession owing to low mortgage bills.

The figures also reveal that the proportion of mortgage holders getting into payment difficulties also fell in the first three months of the year.

The number of home loans in arrears equivalent to at least 2.5% of the outstanding mortgage balance stood at 186,300 in the first three months of the year.

This was down from 196,400 in the last quarter of 2009, and below the 206,800 of the first quarter of last year.

But the figures gave “no cause for complacency”, according to CML director general Michael Coogan.

Just 629 households have been helped under the mortgage rescue scheme in England, separate figures released by the Department for Communities and Local Government show.

When it was launched under the previous Labour government in January 2009, ministers said that up to 6,000 households could be helped by the scheme.

This scheme allows people to sell their property to a local authority or housing association and remain in it as a tenant, or to sell part of the home in a shared equity deal to reduce mortgage payments.

Another 1,849 applications were ongoing by the end of March. In these cases, lenders would hold off any repossession action.

The CML said government support for homeowners had helped keep a lid on repossessions, which are much lower than during the housing slump of the early 1990s.

It has called on the new government to maintain a commitment to those in difficulty – writing a joint letter with Shelter and Citizen’s Advice to the new Chancellor, George Osborne.

This would be particularly important as the government introduces cuts to tackle the fiscal deficit, lenders said.

Mrs Jayne Hewett faced losing her home because she could not afford to meet the re-mortgage payments after she divorced and the mortgage company won a [...]]]> A wife who signed a joint re-mortgage with her husband while he was having an affair will no longer have to meet her repayments, the Court of Appeal ruled yesterday.

Mrs Jayne Hewett faced losing her home because she could not afford to meet the re-mortgage payments after she divorced and the mortgage company won a repossession order.

Mr Justice Briggs, giving the ruling of the three appeal judges, said Mr Hewett “was guilty of a deliberate concealment of the affair, well knowing that its disclosure would have significantly undermined his prospects of obtaining his wife’s consent to his proposal” for a joint re-mortgage to pay his debts.

He allowed her appeal over repossession, saying that concealing his affair from his wife amounted to using undue influence to get her to sign the deal.

First Plus Financial Group can still make a charge on Mr Hewett’s interest in the property which gives them the right to apply for a possession order.

Mrs Hewett bought out her former husband’s interest in Colomb Road, Gorleston, Norfolk, when he was made bankrupt.

Mr and Mrs Hewett married in 1991. By 1999 Mr Hewett was in debt because of overspending on credit cards, said the judge, and the couple, together with Mrs Hewett’s mother, bought a home for all the family for £51,000.

In 2002 the property was remortgaged to cover the cost of extensions and pay off more debts run up by the husband.

By the end of 2003 Mr Hewett’s credit card debts had substantially increased again and, but unknown to Mrs Hewett, he had started an affair.

At the time of the remortgage in 2004, Mrs Hewett believed she was in a “happy, stable relationship”, said the judge.

“Mr Hewett recognised that he and his family faced the loss of their home if his debts could not be re-financed on a secured basis, so as to reduce the overall interest burden to a level within the family’s means,” said Mr Justice Briggs.

He said Mrs Hewett refused to sign the mortgage deal at first, because she was unwilling to risk the family home.

“She was told by her husband that a charge on the property was the only way to rescue the family from its plight, and eventually decided to accede to her husband’s request.”

She said she was told it was the only way to keep the house – “a horrible choice”.

The husband was convicted of forging the name of his mother-in-law on the mortgage form because he feared she would cause difficulties, said the judge.

Mrs Hewett found out about the affair in May 2004 and in January 2005 her husband moved out and they were divorced in 2006.

The same year he lost his job and was made bankrupt with debts including a further £40,000 on credit cards.

She bought out his share in the property for £1 but found it impossible to maintain the instalments to First Plus and possessions proceedings began in 2008.

A county court judge granted the mortgage company possession.

This judge found that although Mrs Hewett faced a “horrible choice”, she made up her own mind to join in the remortgage without oppression, bullying or threats.

Mr Justice Briggs said: “It is evident that Mrs Hewett’s decision to accede to her husband’s request was based upon an assumption on her part that he was as committed as she was to the marriage, to the family and to the preservation of their home life in the future.

“The truth was that he had already embarked upon an affair which, although by no means a certainty, carried with it the serious risk that it would lead in due course to Mr Hewett’s departure from the family and withdrawal of both emotional and financial support, as eventually occurred.

The result was, said the judge, that he would set aside the mortgage on which First Plus bases its claim.

Experts at Cambridge University believe the system is “broken” after they tricked it into accepting transactions without using a valid personal identification number.They say the flaw is [...]]]> Chip and pin technology must be overhauled after it emerged that one in seven people could have already been a victim of a “fatal flaw” in the system.

Experts at Cambridge University believe the system is “broken” after they tricked it into accepting transactions without using a valid personal identification number.

They say the flaw is so fundamental it threatens to undermine the entire security of the system.

Now the Consumer Association Which? has joined them in calling for an investigation and any subsequent overhaul to protect millions of people from fraud.

“We want the banks to look into these potential flaws because we have had many examples where the banks have said a pin was used and the customer said it hasn’t,” said Cathy Neal, a senior researcher at Which? Money.

“Banks say that using the chip and pin system proves that the customer must have used the card. This shows that that is not necessarily true. We don’t yet have enough evidence to say it is fundamentally flawed but there is some evidence it is not perfect.”

Which? said that in a recent survey 14 per cent of people – one in seven – said they have had money taken from their bank account and 13 per cent from a credit card.

Of those around half did not get their money back from the bank, even though they insisted they did not use or authorise the “disputed withdrawal”.

Professor Ross Anderson, a computer expert, claimed to have developed a way of bypassing security systems which renders chip and pin no longer “fit for purpose”.

His team’s “man in the middle” technique involves having a separate card reader in a back pack.

The fraudster puts the stolen credit or debit card into the shop’s reader but then the second reader in his bag sends a “pin OK” signal to the shop terminal.

The shop terminal then sends back a transaction go-ahead signal to the terminal with the stolen card and money is taken off it.

They claim to have used it a number of times without the banks, who firmly deny it is a threat, being any the wiser.

Prof Anderson, who two years proved that cards could be cloned, accused the banks of lying when they said there was no problem.

“How would the banks know if the fraud has taken place?,” he said. “We used it in our canteen and they have never contacted us to say that there was a fraud.

“We have many examples of people who have had their cards stolen and then purchases made using the chip and pin.

“They are adamant they didn’t use it but if the banks say chip and pin has been used you have to pay. I think many of these people would have been victim of the kind of technique we have developed.

“The banks are wrong. All the banks are lying. They are maliciously and wilfully deceiving the customer. If there was any justice then the police would be looking into this. The system is not fit for purpose.”

Stephen Mason, a barrister who specialises in cases of chip and pin fraud, said at the very least the potential breach of security should be investigated.

“There is clearly something wrong with the system,” he said. “I have people who believe as much as £4,000 has been taken from their accounts.

“It is not right for the banks to say our systems are perfect. The banks need to realise there is reasonable doubt about how secure the system is.”

But The UK Cards Association, which represents the banks’ card operations, dismissed the claim, saying that while the research had shown what it was possible to do in theory, this did not mean it was practical or even possible to do in reality.
 

Despite the recession being declared over, many households are still unable to live within their means.

And experts warned insolvency numbers will rise further once interest rates begin to head above their current low level of just 0.5 [...]]]> At least 10,000 Britons are being declared insolvent every month- the highest level on record new official figures reveal.

Despite the recession being declared over, many households are still unable to live within their means.

And experts warned insolvency numbers will rise further once interest rates begin to head above their current low level of just 0.5 per cent.

The latest figures showed 134,142 people in England and Wales were declared insolvent last year, the highest level since records began in 1960 and a sharp increase on the previous record of 107,288 personal insolvencies in 2006.

The individual insolvencies consisted of 17,007 bankruptcies during the last three months of 2009, – which were up 24.9 per cent on the same period a year ago – and 13,219 of its less stringent form, Individual Voluntary Arrangements (IVAs) – which were up 26.3 per cent on the same period in 2008.

An IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.

An alternative to bankruptcy – a debt relief order – was introduced last April, but various restrictions limit those who can apply, such as not owning your own home and having debts of less than £15,000. There were 5,348 of these orders during the final quarter, up from 4,505 in the previous quarter.

Do you need advice? For more information, please see Re-Mortgager’s page at:

MPs described the labour Government’s approach to advising people in debt as a “triumph of bureaucracy over practicality” and urged it to “shake up” its strategy to meet the increasing demand [...]]]> The labour Government’s free debt advice service is being forced to turn people away after being unable to cope with a 28pc jump in demand.

MPs described the labour Government’s approach to advising people in debt as a “triumph of bureaucracy over practicality” and urged it to “shake up” its strategy to meet the increasing demand for help in the current economic climate.

The Public Accounts Committee said the Department for Business, Innovation and Skills’ approach to debt advice was “unnecessarily complex”, with more than 50 different projects and a number of funding streams. Edward Leigh, the chairman of the committee, said: “The whole thing is undermined by poor co-ordination and a lack of clarity about who is in control of it all.”

Consumers owed £1.46 trillion in debt at the end of last year, with personal borrowing representing 160pc of household annual pre-tax income. The recession has caused demand for debt advice to soar, with research suggesting around one in 10 people are struggling to keep up with their borrowings.

But the Government’s free face-to-face service struggled to cope with the 28pc rise in the number of people contacting it during the year to July 2009, leading to a quarter of agencies either turning consumers away or forcing them to wait for more than a month for help.

Richard Bacon, a member of the Public Accounts Committee, said: “At present, the Government is not always using the most cost-effective means of reaching people in need of help with their debts. It costs an average of £265 to provide face-to-face debt advice, but telephone advice costs just £51 and internet advice is cheaper still.”

He said one in four people who saw a debt adviser face to face said they would actually have preferred to have been given advice over the telephone or through the internet.

He said: “The Department for Business, Innovation and Skills needs to use the money it deploys more effectively in order to address the gap between the demand for debt advice and the Department’s current capacity to provide it.”

The figures from the Insolvency Service marked the depth of the recession, with 35,574 people declared insolvent in the last three months of the year.

That was a rise [...]]]> The number of people who were declared insolvent in England and Wales hit a record high in the last quarter of 2009 and during the year in full.

The figures from the Insolvency Service marked the depth of the recession, with 35,574 people declared insolvent in the last three months of the year.

That was a rise of 25% on the same period a year earlier.

Over 2009 as a whole, there were 134,142 people declared insolvent in England and Wales. This was up 26% compared with 2008, and higher than the previous record – in 2006 – of 107,288. Records began in 1960.

The quarterly total was made up of 17,007 bankruptcies – down 5.5% on the same quarter of the previous year, 13,219 Individual Voluntary Arrangements (IVAs) – up 26.3% on the corresponding quarter of the previous year, and 5,348 Debt Relief Orders (DROs) – which were introduced in April.

These DROs allow people with debts of less than £15,000 and relatively few assets to write off these debts without a full-blown bankruptcy.

Record low interest rates would have staved off insolvencies for some people, but long-term unemployment would make it difficult for others to avoid the situation.

IVAs could also have risen as people cutting hours instead of being made redundant had some funds to pay back debts instead of going bankrupt.

Many experts have suggested that there will be more pain to come despite the UK coming out of recession.

In the last quarter of 2009, the number of companies going bust fell by 7% to 1,465, compared with the previous quarter.

The figures continued the downward trend in receiverships, administrations and company voluntary arrangements which has been seen during the past year.

Even so, 2009 as a whole still saw a record number of companies being declared insolvent with an annual total of 6,355, a 1% increase on 2008.

The number of companies being liquidated – the end stage of the insolvency process – fell in the last three months of 2009. There were 4,566 company liquidations, down by 2% on the previous quarter and 1% fewer than a year earlier.

For the whole of 2009, the number of firms being liquidated rose to a record 19,077, an increase of 23% compared with the previous year.

Its latest survey shows that the average UK house price rose by 1.2% in January, pushing the annual rate up to 8.6%.

It means the average UK home now costs £163,481.

The Nationwide said prices had now been [...]]]> The rate of UK house price increases could soon rise above 10% a year the Nationwide building society has announced.

Its latest survey shows that the average UK house price rose by 1.2% in January, pushing the annual rate up to 8.6%.

It means the average UK home now costs £163,481.

The Nationwide said prices had now been rising for nine months in a row, and the rate of increase was the fastest since October 2007.

The three-month on three-month rate, regarded as a less volatile measure of house prices, saw prices rise by 2.1% in January, down slightly from 2.3% in December.

The relative lack of supply in the housing market is one of the reasons why prices have continued to rise.

Many commentators have suggested that the pace of price increases may ease off this coming year.

Activity in the market has been picking up briskly since the spring of 2009.

Recent figures from HM Revenue & Customs (HMRC) showed that the number of homes sold in December jumped to a two-year high of 104,000.

This may have been influenced by buyers rushing to complete their purchases before stamp duty went up again.

Both the Bank of England and the British Bankers’ Association have reported further increases in the number of mortgages being approved – a good short term indicator of future trends in the market.

The Homeowner Mortgage Support Scheme was announced in a big fanfare a year ago to help struggling borrowers stay in their homes, but has ended up helping just 15 families so far.

The labour [...]]]> A labour Government scheme to help homeowners avoid repossession has cost the equivalent of £165,000 for each of the households it has rescued.

The Homeowner Mortgage Support Scheme was announced in a big fanfare a year ago to help struggling borrowers stay in their homes, but has ended up helping just 15 families so far.

The labour Government confirmed today that the scheme has cost the taxpayer £2.5 million.

Experts criticized the cost as “unbelievable” when it had helped so few home owners.

With the average price of home £165,000, they suggested the Government may have just have bought the homes outright for the 15 families it had helped.

Shadow housing minister Grant Shapps said: “These figures will be a slap in the face for the 1,000 families who are being repossessed every week. It’s unbelievable that during the deepest recession since records began the Government is spending millions on a scheme that has been mired in uncertainty and helped just 15 families”

The Homeowner Mortgage Support Scheme is one of several labour Government measures to help struggling home owners. It allows those facing a loss of income to reduce their monthly mortgage payments for up to two years.

Increasing numbers of home owners are falling behind on their mortgage payments, with almost 270,000 at least three months in arrears at the end of September this year, compared to 166,000 during the same period a year earlier, according to the Council of Mortgage Lenders. And the number of repossessions stands at one household in every 1,000.

Other Government measures aimed at those at risk of having their home repossessed include the Mortgage Rescue Scheme, where eligible families can either get an equity loan to reduce their mortgage, or sell their home and remain as tenants.

Figures published last week showed that house prices have risen slowly again and mortgages granted to first-time buyers rose for the third month in a row.

But the recovery has not been sufficient to lift many families out of negative equity, [...]]]> Despite the stuttering recovery in property prices, the fear of repossession still stalks many home owners.

Figures published last week showed that house prices have risen slowly again and mortgages granted to first-time buyers rose for the third month in a row.

But the recovery has not been sufficient to lift many families out of negative equity, causing one housing expert to say the number of repossessed homes may top the numbers seen in the last housing slump. But home owners can take steps to avoid losing the roof over their heads.

Build a financial cushion to protect against shocks. Advisers recommend enough cash to tide you over for three to six months. Keep it in an easy-access savings account.

Unemployment insurance is an option. This cover, often bundled with accident or sickness insurance, normally pays a fixed monthly income, which is set at the outset. It is typically two-thirds of your take-home pay, although you can buy policies that cover just the monthly mortgage.

There is often a delay of one, two or three months before you receive the first payment – the longer this “deferment” period, the cheaper the policy, and payments are made for the maximum of a year.

This insurance is not generally available to people who are self-employed, work on contracts, or for a company that has already announced a redundancy programme.

To avoid repossession, take action the moment you realise there is a problem, or could be one, advisers say. Even if you have not missed a payment it is worth contacting a lender if you think this is likely in the next few months.

Lenders have agreed to deal with arrears “sympathetically and positively”, so they should help you to come to an arrangement that lowers monthly mortgage payments temporarily.

Two options are to increase the term of the mortgage or switch it to an interest-only loan, both cut monthly repayments in the short term. Also look at other costs and pay those items where non-payment has the most serious consequences.

According to Shelter, it takes about nine months between running into problems and being evicted (unless you have a subprime mortgage, where the lenders can be quicker to repossess).

“Your lender will contact you if you miss one mortgage payment, but most of the major lenders won’t get a court summons until you are six months in arrears,” the charity said. “It is during this time that Shelter feels it is vital to talk to your lender and seek independent advice, so that you can negotiate with your lender and hopefully avoid going to court.”

If these negotiations are unsuccessful, or if you ignore letters and calls from a lender, you will receive a summons. This will be sent at least 21 days before a hearing. If the lender is granted an outright possession order you have 28 days to vacate.