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Number of repossessions to increase by 23%
28/04/2008 11:17:00
The number of homeowners facing repossession of their home could increase by a quarter due to the effects of the credit crunch, a financial expert has claimed.
According to findings from the Centre for Economics and Business Research (CEBR) as many as 33,400 homes could face repossession during 2008, a figure which is 300 per cent above the number recorded in 2004.
John Ward, managing economist for CEBR, said: "The stark rise in repossessions forecast shows why the Chancellor and the Bank of England are so keen to sort out the problems in the wholesale financial markets."
The outcome will be a reduction in house prices and an increase in repossessions unless "this tap of mortgage finance starts to flow again", he added.
According to the body, banks have become increasingly reluctant to lend since they lost money during the US subprime crisis.
Meanwhile, the Bank of England has attempted to address the issue.
It cut the base interest rate to five per cent and is allowing banks to swap their riskier assets for safer ones in a deal worth £50 billion.
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