Help pledged over repossessions

LONDON (Reuters) - The government plans to boost debt advice and provide free legal aid to help homeowners avoid repossession, it said on Friday, as concern grows over the economic impact of rising borrowing costs and weakening property prices.

With 1.4 million fixed-rate mortgages set to end this year, the government said it plans a new debt advice service, extra training for local authority staff and free legal representation in English county courts. It also aims to work with lenders to provide more information for borrowers facing trouble.

The news came ahead of official data on property repossessions, due to be published on Friday and expected to show a rise in claims as the credit crunch bites. Repossession rates remain historically low -- at around a third of the rate of the early 1990s -- but are expected to rise.

House prices have begun to fall after a long-running boom that helped to fuel economic growth as consumers borrowed against the rising value of their homes.

"It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early 1990s," Housing Minister Caroline Flint said on Friday.

"The fundamentals of the housing market remain strong with high employment, low interest rates, and long-term demand for homes from first-time buyers."

Finance minister Alistair Darling held talks with major retail banks on Thursday, urging them to provide better information for borrowers.

(Reporting by Clara Ferreira-Marques; Editing by Ruth Pitchford)