Home repossessions at 16-year high

LONDON (Reuters) - English and Welsh courts ordered more home repossessions in the second quarter of 2008 than at any time since the housing market crash of the early 1990s, in a further sign the economic slowdown is hitting households hard.

The Ministry of Justice on Friday reported an annual jump in orders for mortgage repossessions in England and Wales of 24 percent in the second quarter to 28,658 -- the highest since the third quarter of 1992 when 30,587 orders were made.

Britain, whose economy is at growing risk of contraction, suffered its last recession in the early 1990s when hundreds of thousands of people lost their jobs and homes.

While the government figures confirm a sharply worsening picture for homeowners, the proportion of repossession orders to outstanding mortgages remains well below the rates seen in the early 1990s.

The Council of Mortgage Lenders says about 0.16 percent of properties with outstanding mortgages were repossessed in the first half of this year, compared with a peak of 0.4 percent in the second half of 1991.

Also, since many of the court orders made will not have been enforced yet, and around 50 percent are often suspended, the number of actual repossessions will likely be lower than the 28,658 reported orders in the second quarter.

In the first quarter, 27,515 orders were made. The number of actual repossessed homes came in at 18,900 -- a leap of 41 percent on the quarter.

Banks have been toughening up their lending terms after funding on global financial markets dried up in the credit crisis. That has hurt homeowners seeking new mortgage deals as their fixed term arrangements come to end.

With unemployment and insolvencies on the up, house prices falling sharply and wage growth failing to keep up with rising living costs, analysts say more people look set to lose their homes.

(Reporting by Matt Falloon and Sumeet Desai; Editing by Ruth Pitchford)