Arrears and possessions have fallen to their lowest levels for 20 years, CML figures reveal.
Nearly 12,000 properties were repossessed by mortgage lenders during 2002 – 0.11% of all mortgages.
This compares with 18,280, or 0.16% of mortgages, in 2001. Over 50,000 mortgages – fewer than one in 200 – were in arrears of more than six months. The figures are the most positive since 1982.
Low rates of arrears and possessions reflect the benign state of the housing market now. The CML says it is not complacent about future uncertainty, and has announced a new sustainable home-ownership target to minimise the risk of repossession, whatever the economic circumstances.
The new target is to reduce the number of possessions over the economic cycle. The CML wants to keep the average annual number of possessions below 30,000, some 5,000 less than the average over the last 10 years.
It also wants to keep possessions lower than they would have been in comparable economic circumstances in the past.
The CML says it will be challenging to meet these targets, especially given the reduction in state assistance that took effect in 1995. This introduced a nine-month wait before being able to claim income support for mortgage interest.
The new target replaces the goal which lenders and insurers set for themselves in 1999, when the sustainable home-ownership initiative was launched, of 55% take-up of mortgage payment protection insurance by 2004.
The CML says there are several reasons for the change. Firstly, it has become apparent that people are using a wide range of other insurances, not just MPPI, to offset their mortgage payment risks.
Second, the economic environment has been much more benign than expected since 1999, with strong house price inflation and low unemployment.
The industry has concluded that bearing down on the number of possessions over the long-term is a more comprehensive objective than insurance take-up alone in making home-ownership truly sustainable.
Peter Williams, CML deputy director-general, says: “The time has come to give fresh impetus to our efforts to promote sustainable home-ownership. Together with the insurance industry and the government we are looking for as many ways as possible to protect borrowers from the risk of losing their home.”