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Insolvencies slow while repossessions grow

The rise in personal insolvencies has slowed sharply in the second quarter of 2007, and now stands just 4.2 per cent higher than last year.Previous years have seen double-digit year-on-year growth in the number of personal insolvencies, but this year they fell 8.1 per cent on the quarter to 26,956, from all-time highs in the previous two quarters.This fall comes despite five interest rate hikes already this year and increases in living costs and signals that more and more homeowners are struggling to meet their mortgage repayments.According to the Council of Mortgage Lenders (CML), home repossessions have risen by almost 30 per cent already this year, compared with the same period for 2006. Michael Coogan, director general of the CML, said: "The sharp rise in repossessions in the first half of this year has been driven by a combination of factors, but the absolute number of repossessions is still low by historical standards."Interest rates are clearly higher than many were expecting, and are set to remain so and the greater risks inherent in sub-prime lending are resulting in significantly higher levels of repossession in that part of the market compared to mainstream experience."

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