Repossessions of British homes jumped 71% in the second quarter as rising borrowing costs made it harder for property owners to pay off their mortgages, U.K. financial regulators said Tuesday.
The number of homes repossessed increased to 11,054 from 6,476 a year earlier, the Financial Services Authority said, citing data collected from about 300 U.K. financial companies. The figure was 21% higher than in the previous quarter.
"Consumers are increasingly struggling to clear their arrears," the London agency said. The regulator estimates that delinquencies amounted to $48 billion at the end of June.
Prime Minister Gordon Brown ordered judges last week to ensure that homes are repossessed by banks only as a last resort.
A looming recession threatens an increase in U.K. mortgage defaults; Rightmove PLC, the operator of Britain's most-used property Web site, said this week that the rate of repossessions is set to rise further in the months ahead.
By the end of the first quarter, 312,000 mortgages were delinquent, 16% more than a year earlier, the FSA said.
The authority considers an account delinquent when the missed payments are equivalent to at least 1.5% of the outstanding loan.
The Bank of England said Tuesday that its estimates indicate that delinquencies arrears in the U.K.'s $2.2 trillion mortgage market, Europe's largest, may eventually increase to 4.4%, from 1.3% now.
If home prices in the United Kingom were to fall another 15%, about 10% of U.K. mortgage borrowers could find that their loans exceed the value of their properties, the central bank said.
