Repossessions were at their lowest level in five years in the fourth quarter of 2012, according to figures from the Council of Mortgage Lenders.
The number of properties taken into possession by first-charge residential lenders fell from 8,200 in the third quarter of 2012 to 7,700 in the fourth, marking the lowest quarterly figure since the fourth quarter of 2007 when it was 6,900.
The annual figure for repossessions was also the lowest since 2007 when it was 25,900, falling from 37,300 in 2011 to 33,900. The stock of properties in possession held by lenders at the end of 2012 was also at its lowest for over five years.
A total of 157,900 households ended the year with arrears of 2.5 per cent or more of their mortgage balance, down from 161,400 in 2011. At the peak of the arrears cycle, at the end of the first half of 2009, the number was 216,400.
In the highest band of arrears, where more than 10 per cent of the mortgage balance is outstanding, the number of cases rose from 28,200 at the end of 2011 to 28,900 by the end of 2012.
CML director general Paul Smee says: “The fall in arrears and possessions is obviously very welcome. Households fall into difficulty for a variety of reasons, most of which cannot be anticipated. Wherever possible, lenders will work with borrowers to manage periods of temporary financial difficulty and enable them to keep their home. Anyone worried about their situation should talk to their lender, who will try to help them.”
Richard Sexton, director of e.surv chartered surveyors director Richard Sexton says that falling repossessions levels are a bellweather of an improving economy.
He says: “Lenders are growing in confidence, and feel they have the capacity to support a modest growth in arrears cases, which is music to the ears of borrowers in dire financial straits. But in the long-term it’s an unsustainable strategy.”
Sexton argues that if the number of borrowers in serious arrears continues to increase, which it has done for the last 10 consecutive quarters, lenders will eventually have to pull the plug.
He adds: “They are taking the hopeful position that borrower finances improve and arrears levels drop in the long-term. If they don’t, repossessions levels will have to increase further down the line. The imbalance between falling repossessions and increasing arrears has been growing since the financial crisis: since the end of 2008 repossessions have fallen 31 per cent but the number of borrowers in serious arrears has increased 18 per cent. That trend can’t last forever.”