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Mortgage arrears and possessions decline again

Published: 14 August 2014

Mortgage arrears and possessions continued to fall in the second quarter of 2014, according to data published today by the Council of Mortgage Lenders.

The number of mortgages in arrears of 2.5% or more of the balance stood at 131,400 (1.18% of all mortgages) at the end of June, down from 138,200 (1.24%) three months earlier and 154,900 (1.38%) a year ago. There was a fall in numbers across all arrears bands, and the overall total is now at its lowest since the first quarter of 2008.

Chart One: Arrears on mortgages, by percentage of total balance in arrears

14.08.2014-arrears on mortgages, by percentage of total balance in arrears

Source: CML Research

A total of 5,400 properties (representing 0.05% of all loans) were taken into possession in the second quarter, down from 6,400 in the preceding quarter and 7,600 a year ago. At 11,800, the number of cases of possession in the first half of this year was at its lowest since the second half of 2006. 

The totals reported today include arrears and possessions in the buy-to-let sector, which also continued to decline. The number of buy-to-let mortgages in arrears of three months or more (including cases in which a receiver of rent had been appointed) stood at 13,400 at the end of June, down from 14,700 three months earlier and 17,900 a year ago. In the second quarter, 1,300 buy-to-let properties were taken into possession, compared to 1,400 in the previous quarter and a year ago.

Chart Two: Possessions, buy-to-let and owner occupied markets

14.08.2014-possessions, buy-to-let and owner occupied markets

Source: CML Research

Today's data is broadly in line with our revised forecast of 135,000 mortgages in arrears at the end of 2014 (down from 150,000) and 25,000 cases of possession in the year (down from 28,000).

Commenting on the data, CML director general Paul Smee said:

"Another fall in arrears and possessions is clearly welcome and shows that borrowers, lenders and money advisers are generally continuing to work well to contain payment problems where they arise, helped by an improving economy and low interest rates. But rates will rise at some stage, of course, and borrowers should be planning for that now.

"We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of 'baby steps', matched to a careful assessment of the ability of households to deal with higher borrowing costs. Any borrower anticipating payment problems should talk to their lender as soon as possible. Today's figures continue to show that in many cases it is possible to work through a period of difficulty, with lenders committed to helping borrowers get their finances back on track."

 

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 11.1 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 for the same period were published on 7 August and can be found here. 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 third quarter of 2014 will be published on 13 November 2014.

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