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Arrears and repossessions still falling, reports CML

Published: 13 November 2014

Latest figures from the Council of Mortgage Lenders for the third quarter of 2014 show a continuing reduction in the number of both repossessions and mortgages in arrears, across all categories.

At the end of the third quarter, the proportion of mortgages with arrears equivalent to 2.5% or more of the total mortgage value was 1.12% - down from 1.18% in the second quarter and 1.33% in the third quarter of last year. This is the lowest proportion since the first quarter of 2008 (1.08%).

In numerical terms, this equates to 125,100 mortgages - down from 131,400 in the second quarter and 149,400 in the third quarter of 2013.

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

13.11.2014 - arrears on mortgages by percentage of total balance in arrears

Source: CML Research

During the third quarter, the proportion of all mortgaged properties taken into possession by lenders was 0.04% (5,000 properties). This is the lowest quarterly proportion and number since quarterly records began in 2008. It compares with 0.05% (5,400 properties) in the second quarter, and 0.06% (7,200 properties) in the third quarter of 2013.

Within the overall reported totals, both the owner-occupier sector and the buy-to-let sector have experienced reductions in both arrears and repossessions. Out of the total 5,000 repossessions, 1,100 were on buy-to-let mortgages, unsurprisingly representing a slightly higher repossession rate of 0.07% in buy-to-let than the overall and owner-occupier rate of 0.04%.

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

13.11.2014 - possessions buy-to-let and owner occupied markets

Source: CML Research

Commenting on the latest trends, CML director general Paul Smee said:

"Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline.

"Encouragingly, recent research also suggests that many households are preparing themselves for the prospect of higher interest rates, so we expect any uptick in payment difficulties to be relatively muted if and when rates do begin rising. But a key activity for lenders now is considering how best to support their borrowers in planning ahead for a time when debt servicing costs are higher than they are now."

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 repossessions 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 repossession statistics for the same period can be found on the website. This includes Quarterly National Statistics on repossession claim actions in county courts by mortgage lenders and social and private landlords.

4. CML arrears and repossessions data for the fourth quarter of 2014 will be published on Thursday 12 February 2015.

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