Continuing fall in repossessions

Mortgages remain relatively cheap compared with recent years

The number of homes repossessed in the UK is continuing to fall as low interest rates help homeowners to keep paying their mortgages.

Lenders seized 8,900 homes in the three months to October – a drop of 5% compared with the previous quarter, the Council of Mortgage Lenders (CML) said.

This was the fourth quarter in a row that numbers have dropped since they reached a peak of 12,200.

However, the CML warned that the trend of falling repossessions could reverse.

There was little change in the number of borrowers who were falling behind on mortgage repayments.

The CML’s figures showed that 176,100 mortgages had arrears of 2.5% or more of the outstanding balance. This was down slightly from 178,200 three months earlier and down from 203,800 a year earlier.

“Despite the severity of the economic slowdown, and the likelihood of only a slow and protracted recovery, a combination of low interest rates and the commitment of borrowers, lenders, the government and debt advisers has helped to keep mortgage payments problems in check so far,” said CML director general Michael Coogan.

“But we cannot take falling arrears and possessions for granted, and the recent welcome trend may reverse.”

The CML’s figures also showed that the number of homeowners with the lowest level of arrears – where payments are behind by between 1.5% and 2.5% of the outstanding loan – crept up slightly by 100 to 83,300.

But there was a dip of 1,700 in the proportion of mortgage holders with higher levels of arrears of between 2.5% and 5% of the outstanding loan.

The number of people with the biggest arrears difficulties – arrears of more than 10% of the outstanding loan – increased slightly.

Mr Coogan said that some, but not all, householders would be able to cope with any future increases in interest rates.

Many householders are concerned about the economic situation

“Many households are adept at adjusting their spending and prioritising their bills to manage their way successfully through periods of temporary difficulty,” he said.

“But the capacity to do this will depend on individual circumstances, the extent to which income falls or mortgage costs rise, and how soon they can get back into full employment.”

There have been 28,400 repossessions so far this year, which suggests that by the end of the year the number will be fewer than the CML’s prediction of 39,000 homes to be repossessed this year, and certainly down from its previous forecast of 53,000.

However, figures from the Ministry of Justice show the number of homeowners involved in the earlier stages of a repossession action in county courts in England and Wales has risen slightly.

In the third quarter of the year the number of possession claims launched by lenders was up 4% from the previous quarter to 18,931.

Some 14,138 mortgage possession claims led to orders being made by the courts, which was 5% higher than the previous quarter.

Nearly half of all orders still end up being suspended by the courts, typically to give the home owner time to pay.

Campbell Robb, chief executive of housing charity Shelter, said some people were hanging on to their homes “by the skin of their teeth”.

“With so many homeowners in serious difficulty, the pressure could become too much and unless we take urgent action we may well be faced with a sudden surge of people at risk of losing their home in the coming months,” he said.

Separate figures from the CML showed that there were 50,000 mortgages for house purchase advanced in September – the same as the previous month – displaying a continuing lack of appetite for new home loans in the UK.

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