Published: 12 February 2015
The number of repossessions fell to 21,000 in 2014 - 26% fewer than the 28,900 in 2013, and the lowest number since 2006, according to latest data from the Council of Mortgage Lenders. At 0.19%, the repossession rate was also lower in 2014 than at any time since 2006.
Out of the 21,000 total number of repossessions, 16,100 were on owner-occupied properties, and 4,900 were on buy-to-let properties.
At 0.3%, the repossession rate on buy-to-let mortgages was higher than the 0.17% on owner-occupier loans, despite the fact that the underlying arrears rate was lower on buy-to-let lending than on home-owner lending. This is unsurprising, as lenders offer extended forbearance to owner-occupiers to help them get through periods of financial difficulty without losing their home.
Chart 1: Possessions, buy-to-let and owner occupied markets
There were also fewer mortgages in arrears at the end of 2014 than at any time since 2006. 1.05% of all mortgages were in arrears equivalent to 2.5% or more of the mortgage balance - down from 1.29% at the end of 2013 (and 1.12% at the end of the third quarter of 2014).
In numerical terms, this equates to 116,800 loans - down from 124,400 at the end of the third quarter, and 144,600 at the end of 2013.
Within the total number of mortgages in arrears, there was also a decline in all of the individual arrears bands. Even among the heaviest arrears band (more than 10%), there was a 14% decline year-on-year to 24,700 cases at the end of 2014 - 5% lower than at the end of the third quarter.
Chart 2: Arrears on mortgages, by percentage of total balance in arrears
The two main traditional drivers of mortgage difficulty are income shocks (such as unemployment) and interest rates. Both factors are relatively benign at present, assisting the welcome decline in both arrears and repossessions, supported by effective lender practices.
Looking ahead, the CML and lenders are very aware that, at some future point, interest rates will rise, and that this will put increased pressure on some household finances. The CML and lenders urge customers to plan ahead for this, to reduce the risk of shocks whenever interest rates do eventually rise.
CML director general Paul Smee commented:
"The relatively low rate of repossession among owner-occupiers - around 1 in 600 mortgages last year - should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort.
"No-one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing. It's essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise."
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 £1.3 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 gov.uk 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 first quarter of 2015 will be published on Thursday 14 May 2015.