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Mortgage arrears down in first quarter of 2014

Published: 8 May 2014

Both the number and the proportion of mortgages in arrears fell during the first quarter of 2014, according to new figures from the Council of Mortgage Lenders.

At 138,200 and 1.24%, both the number and proportion of mortgages with arrears of more than 2.5% of the mortgage balance were at their lowest level since the second quarter of 2008. These numbers compare with 144,600 and 1.29% at the end of the fourth quarter of 2013; 159,700 and 1.42% at the end of the first quarter of 2013. The number of mortgages in arrears fell in all arrears bands, including the most serious band - at the end of the first quarter, 1 in 400 mortgages had arrears equivalent to 10% or more of the mortgage balance.

Arrears on mortgages, by percentage of total balance in arrears

08.05.2014 - arrears on mortgages by percentage of total balance in arrears

Source: CML Research

Repossessions showed their usual seasonal pattern in the first quarter - rising a little to 6,400, up from 6,100 in the fourth quarter of 2013, but 20% down on the 8,000 repossessions in the first quarter of 2013.

These figures include both owner-occupier mortgages and buy-to-let mortgages. While direct comparisons are made more complicated by the fact that, in the buy-to-let sector, a "receiver of rent" may sometimes be appointed if the borrower defaults, the arrears rate is higher in the owner-occupier sector. Around 1.7% of home-owner mortgages had arrears equivalent to at least three months' mortgage payments while the proportion was around 0.9% among buy-to-let mortgages.

Repossessions, buy-to-let and owner-occupied markets

08.05.2014 - possessions buy-to-let and owner occupied

Source: CML Research

Commenting on the latest arrears and possessions numbers, CML director general Paul Smee said:

"The downward trend in the number of mortgages in arrears or ending in repossession is obviously very welcome. Repossession is absolutely the last resort - the aim is to keep people in their home and get their finances back on track wherever possible.

"Lenders fully recognise that behind the numbers, these are real households, with differing circumstances. Lenders try to ensure that all borrowers are treated fairly and sensitively. They continue to improve their practices to try to achieve the best outcomes when payment problems do occur. Combined with low interest rates and an improving jobs market, these strategies are clearly helping many households."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.2 million mortgages in the UK, with loans worth over £1.2 trillion.

2. CML arrears and possessions figures are for the UK as a whole. No breakdown of data is available for the regions or for individual countries within the UK.

3. The Ministry of Justice's mortgage and landlord possession statistics can be found on the Ministry of Justice website. This includes Quarterly National Statistics on possession claim actions in county courts by mortgage lenders and social and private landlords.

4. CML arrears and possessions data for the second quarter of 2014 will be published on 14 August 2014.

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