There was a fall in the first quarter of this year in the number and the proportion of mortgages in arrears or ending in repossession, the Council of Mortgage Lenders (CML) has reported.
A fall was experienced in all arrears bands, and across both owner-occupier and buy-to-let lending.
The total proportion of all mortgages with arrears equivalent to more than 2.5% of the mortgage balance was 1.03% at the end of the first quarter. This was down from 1.05% in the fourth quarter of 2014, and well down on the 1.24% recorded at the same time last year.
In numerical terms, there were 113,900 loans in arrears. Of these, just 24,400 were in the most severe arrears band (more than 10% of balance), equating to 0.22% of all mortgages. This is the smallest number and proportion of mortgages in the most serious arrears band since the end of 2008.
The proportion of mortgages resulting in repossession in the first quarter was 0.03%, down from 0.04% in the fourth quarter of 2014 and 0.06% in the first quarter of last year. The number of repossessions was 3,100 (down from 4,200 in the fourth quarter of last year, and 6,400 in the first quarter of 2014).
Paul Smee, CML director general, said: “Although complacency would be misplaced, the underlying picture continues to be one of improvement and a continuing reduction in mortgage arrears and repossessions. The message remains the same: don’t delay in contacting your lender if you are experiencing temporary payment problems, as lenders want to help you resolve them, and will only take possession of property as a last resort.”
Jonathan Harris, director of mortgage broker Anderson Harris, said: “Repossessions continue to fall, while the number of borrowers in arrears has also declined. This is not altogether surprising with rock-bottom interest rates and improving employment numbers, as well as lenders prepared to be flexible and show forbearance.
“However, there are still thousands of homeowners being repossessed each year, which begs the question: what will happen when interest rates do start to rise? How will people cope? Even though we have had a benign interest rate environment for some years now, there are likely to be people whose finances are teetering on a knife edge and rate rises could easily push them over.
“Interest rate rises are inevitable at some point; when they come, they must do so gradually. Thankfully the Bank of England has suggested that this will be the case.
“Nevertheless, borrowers must keep their lender in the loop if they are struggling with their mortgage. It is much easier and less stressful to come up with solutions early on than further down the line when the options may be much more limited.”
