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Repossessions and mortgage arrears falling
17
NOV
2014

Repossessions and mortgage arrears falling

The number of repossessions and mortgages in arrears has fallen, according to new figures.

Research from the Council of Mortgage Lenders found that during the third quarter of 2014, there was a noticeable reduction across all categories.

The end of the quarter saw the proportion of mortgages with arrears equivalent to over 2.5 per cent of the total value down from 1.18 per cent to 1.12 per cent – the lowest proportion since the first quarter of 2008.

In terms of numbers, the CML figures equate to as many as 125,100 mortgages, down from the 131,400 in the second quarter of the year.

Repossessions

The third quarter saw the proportion of mortgaged properties falling into possession by lenders stand at 0.04 per cent, the lowest quarterly proportion since quarterly records began. It means that only 5,000 houses were repossessed, as opposed to 5,400 in the previous quarter and 7,200 over the same period last year.

CML director general Paul Smee said: "Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline.

"Encouragingly, recent research also suggests that many households are preparing themselves for the prospect of higher interest rates, so we expect any uptick in payment difficulties to be relatively muted if and when rates do begin rising. But a key activity for lenders now is considering how best to support their borrowers in planning ahead for a time when debt servicing costs are higher than they are now."

The research showed that it was buy-to-let mortgages that were the most likely to fall into arrears, especially when compared to owner-occupied properties.

In terms of overall loans, 0.07 per cent of buy-to-let properties found themselves in arrears, while the same was true for just 0.04 per cent of owner occupied properties.

Problems can deepen

However, despite the positive results, there have been a number of other experts that remain concerned.

Research from Ascent Performance Group, cited by the Financial Times, found that homeowners that had managed to fall into serious arrears were getting into deeper debts, with the average amount owed rising to £7,021.

The term 'serious arrears' is given to any householder that has failed to make payments for six months in a row.

That number is around 20 per cent higher than in the first three months of the year, with the hotspots for serious arrears found to include Warrington, Walsall and Preston, where householders owed an average £14,073.

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