Repossessions and arrears continue to fall

The number of properties repossessed in the UK halved year-on-year in the second quarter as low interest rates and higher levels of employment continued to help struggling borrowers stay in their homes.

Figures from the Council of Mortgage Lenders show there were 2,500 properties taken into possession in Q2 – down 53 per cent from 5,400 in the same quarter of 2014. Of the 2,500, 1,800 were in the owner-occupied market and 700 in the buy-to-let market.

The total number of borrowers with arrears equivalent to at least 2.5 per cent of the outstanding balance was 106,400 in Q2 (0.96 per cent of all mortgages) – down 17.4 per cent annually from 128,900.

Of the 106,400 borrowers in serious arrears, 100,700 were owner-occupied and 5,700 were buy-to-let.

CML director general Paul Smee says: “Across all measures, mortgage arrears and repossessions are continuing to improve. We continue to see some amplification of the downward trend in repossessions, which may bring into question our repossessions forecast for 2015 as a whole.

“This trend is very welcome. Low interest rates are acting as a significant support for home-owners in general and are likely to be helping to stave off low-level arrears for stretched households in particular. 

“As ever, we urge borrowers to think ahead to when interest rates rise and to contact their lender without delay if they are in difficulty. Prompt action helps to prevent problems worsening.”

Anderson Harris director Jonathan Harris says: “Repossessions continue to fall, while the number of borrowers in arrears has also declined. This is to be expected with rock-bottom interest rates and improving employment figures, as well as lenders being prepared to be flexible and show forbearance. 

“However, there are still tens of thousands of homeowners being repossessed or finding themselves in arrears on their mortgage each year, which begs the question: what will happen when interest rates do start to rise? How will people cope? 

“We suspect that, when it comes to their finances, there are many people teetering on a knife edge and rate rises could easily push them over.”

Last week, the Office for National Statistics reported that employment levels had fallen for the first time in more than two years in the three months to July, although the total number in work remained 354,000 more than at the same point in 2014.