Arrears have dropped again in Q2 2010, says CML

The number of properties taken into arrears or re-possessed by first-charge mortgage lenders fell again in Q2 2010, reports the Council of Mortgage Lenders.

There were 9,400 repossessions in Q2 compared to 9,800 in Q1 and 11,800 in Q2 2009.

The number of mortgages behind with payments also fell with 178,200 loans with arrears equivalent to 2.5% or more of their mortgage balance at the end of June.

This is 5% lower than at the end of March, and 17% lower than a year earlier.

Michael Coogan, director general of the CML, says: “Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession.

“But the safety net for borrowers is weakened by the prospect of higher interest rates, a possible rise in unemployment, a counter-productive stigma hanging over mortgage payment protection insurance, uncertainty over future debt advice funding, reduced government support for mortgage payments, and mortgage rescue schemes being reviewed as part of the deficit reduction plan.

“While we don’t want to cry wolf, it seems obvious that the ongoing prognosis for arrears and possessions is far from a healthy all-clear. We hope the coalition government will not risk undermining the chances of extending the welcome trends this year by removing support mechanisms that work.”

But the continuing decline in payment problems has led the CML to revise its forecasts for arrears and repossessions in 2010 as a whole.

The CML now expects 175,000 mortgages to end the year 2.5% or more in arrears, compared with the previous forecast of 205,000. A total of 39,000 repossessions is now forecast for 2010 as a whole, compared with the previous forecast of 53,000.

But the CML adds that the headline arrears figure masks differences in the experience of different arrears bands.