Repossession figures for 2009 reached a 14-year high, but arrears and possessions declined in fourth quarter, the CML has reported.

Mortgage lenders took 10,200 properties into possession in the fourth quarter of 2009 – 13% lower than in the third quarter, and 2% down on the fourth quarter of 2008, according to the Council of Mortgage Lenders.This figure reflects the number of possessions taken by first charge lenders on both home-owner and buy-to-let mortgages.

In 2009 as a whole, this brought the total number of possessions to 46,000. This was lower the CML’s most recent forecast of 48,000, and significantly fewer than the 75,000 forecast at the start of the year, but still 15% higher than the 40,000 in 2008.

In terms of payment difficulties, 188,300 mortgages ended the year with arrears equivalent to at least 2.5% of the outstanding mortgage balance (for example, £2,500 or more arrears on a £100,000 mortgage balance). This was lower than the 195,000 the CML had anticipated, and 3% lower than at the end of the third quarter – but still 3% higher than at the end of 2008.

Within the total number of arrears cases, the CML sees a different picture in terms of what seems to be happening among households with lower levels of arrears (where the numbers are improving), and higher levels of arrears (where the numbers are little changed). The trade body believes this suggests that at present some borrowers facing only modest difficulties are being helped by low interest rates to get back out of trouble, whereas those with more severe problems may be stabilising their arrears but not recovering from them, and lender forbearance is likely to be a significant factor keeping them in their homes.

Looking ahead, the CML’s current 2010 forecast of 205,000 arrears cases and 53,000 properties taken into possession may be a little pessimistic, given that unemployment is faring better than expected so far, and that low interest rates, lenders’ arrears management policies, and government assistance schemes are working well to support many borrowers through temporary difficulties. However, the economic and political outlook remains uncertain, and interest rates may rise sooner than we expect if inflationary pressures build up. It would be premature to assume that housing market recovery will necessarily follow a smooth course.

CML director general Michael Coogan said: “The fact that mortgage arrears and possessions did not rise as much as we feared in 2009 is testament to the effect of low interest rates