Arrears and possessions continue to fall, reports CML
Published: 11 August 2016
The number of mortgages in arrears continued to fall in the second quarter of this year, and is now at its lowest level since records began more than 20 years ago. Data from the CML show that at the end of June there were 92,500 mortgages in arrears of at least 2.5% of the balance (0.84% of the total), down from 95,900 at the end of March. The number of mortgages in arrears was 13.4% lower than a year ago, when the total stood at 106,800, and is now at its lowest level since the run of figures began in 1994.
Chart 1: Arrears on mortgages, 2.5% or more of balance outstanding
The number of properties taken into possession also fell in the second quarter, to 1,900 (down from 2,100 in the first three months of the year). There was a decline in both the numbers of owner-occupied (1,300, down from 1,500) and buy-to-let (500, down from 700) properties taken into possession (all figures rounded to nearest hundred). If the present trend continues, the number of mortgaged property repossessions this year is on course to be the lowest since 1982 (when there were 6.5 million mortgages, compared to 11.1 million today).
Chart 2: Repossessions, buy-to-let and owner-occupied markets
A more detailed breakdown of the data shows that there was a fall in the number of borrowers in each band of arrears, apart from those owing more than 10% of the mortgage balance. The number in this category edged up from 23,500 to 23,700 - the same number as at the end of last year.
Chart 3: Arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding
Ministry of Justice figures, due to be published today, are expected to continue to reflect a pattern in which the number of mortgage possessions is significantly lower than in the rental sector. Those figures showed, for example, that there were 42,729 rental evictions in England and Wales in 2015, compared to 5,592 mortgaged property repossessions, even though the rented sector accounts for only around one-third of the housing stock.
CML data also shows different patterns of arrears and possessions in the owner-occupied and buy-to-let mortgage markets. As before, arrears rates are higher among owner-occupiers than among buy-to-let landlords, while rates of possession are lower. This is because lenders try to avoid repossession wherever possible to help owner-occupiers recover from a temporary period of payment difficulty, but may move more quickly to protect their position on rental properties (as tenants move out) in the more commercial buy-to-let sector.
Commenting on the new data, CML director general Paul Smee said:
Another welcome reduction in arrears and possessions shows that borrowers are continuing to prioritise their mortgage commitments and that lenders remain committed to helping them through a period of temporary difficulty, wherever possible. As ever, the key to success in dealing with any payment problems is to address them as soon as possible. Any borrowers anticipating difficulty in paying their mortgage should therefore speak to their lender at the earliest opportunity.
Notes to editors
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 97% 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. Due to a change in methodology used to compile CML arrears and possessions data, to improve the quality of the results, there is a break in the data series between the first and second quarters of 2014. The figures are, however, directly comparable back to the second quarter of 2014.
3. The current underlying trend for repossessions is one of continuing gentle downward movement. For technical reasons relating to lenders' processes, the number of repossessions over the past year or so has been showing an over-stated reduction. This is expected to unwind in the coming months. Arrears numbers are not affected.
4. CML arrears and possessions figures are for the UK as a whole. No breakdown of data is available for English regions or for individual countries within the UK.
5. The Ministry of Justice's mortgage and landlord repossession statistics for the same period can be found at the gov.uk website. These include quarterly national statistics on repossession claim actions in county courts by mortgage lenders and social and private landlords.
6. CML arrears and possessions data for the third quarter of 2016 will be published on Thursday 10 November.