Arrears and repossessions continue to fall

The number of repossessions continued to fall in the first half of 2003, research by the Council of Mortgage Lenders reveals.

The research also shows this is accompanied by a continuing fall in the numbers of households facing mortgage arrears.

But in its new risk review, designed as an early warning system of changes that could lead to a rise in arrears, the CML warns that there is no room for complacency.

A total of 4,270 properties were taken into possession by mortgage lenders during the first half of 2003 compared to 6,850 repossessions in the first half of 2002. The CML has reduced its forecast for the likely number of possessions for 2003, and now expects around 9,600 for the year as a whole.

The CML report also states that at 14,440, the number of mortgages in arrears of more than 12 months has fallen by 20% compared with the first half of 2002. The number of six to 12 month cases fell to 33,560 which is 19% lower than in the first half of 2002, while the number of three to six month cases fell to 60,960, which is 18% lower than the first half.

But the CML urges the government, the FSA, lenders and borrowers themselves not to lose sight of the fact that personal borrowing is standing at high levels.

Michael Coogan, CML director-general, says: “The continuing reduction in arrears and possessions is obviously good news. But at the same time it makes sense to plan ahead for a less benign economic environment. Interest rates are expected to rise next year, albeit modestly, and economic uncertainty remains.

“Against this backdrop we would urge all borrowers, and especially those who have bought recently and carry high levels of debt, to ensure that they are building in enough flexibility to their household finances to be able to cope with higher mortgage payments.”