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Mortgage arrears and repossessions continue to fall in second quarter

Published: 13 August 2015

The repossession rate - already at its lowest since records began - continued to fall in the second quarter of 2015, according to latest data from the Council of Mortgage Lenders. In that period, the rate was 0.02% - equivalent to just 1 in 5,000 mortgages. Arrears also continued to fall.

There were 2,500 properties taken into possession in the second quarter, down from 3,000 the previous quarter and 5,400 in the second quarter of last year. Of these, 1,800 were in the owner-occupier market, and 700 in the buy-to-let market. However, as in the first quarter, the current flow of repossessions probably continues to remain lower than the underlying trend would imply, even though arrears are also falling [see note 3 to editors].

Chart 1: Repossessions, buy-to-let and owner-occupied markets

Chart showing repossessions buy-to-let and owner-occupied markets

Source: CML Economics

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In terms of arrears, the total number of mortgages with arrears equivalent to 2.5% or more of the mortgage balance was 106,400.This equated to 0.96% of all mortgages - again, the lowest rate since quarterly records began in 2008.

Chart 2: Arrears on mortgages, 2.5% or more of balance outstanding

 Chart showing arrears on mortgages 2.5% or more of balance outstanding

Source: CML Economics

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It is worth noting that this is the first quarter in which the CML has been able to publish fully consistent data on arrears and possessions across both the owner-occupier and the buy-to-let markets. As a result of improvements to the underlying data surveys, some back data has been restated [ see note 2 to editors].

Of all loans with arrears of more than 2.5% of balance, 100,700 were owner-occupier, and 5,700 buy-to-let. In both the owner-occupier and buy-to-let markets, the number and proportion of mortgages in arrears fell or remained static in all arrears bands - none experienced a worsening.

Chart 3: Arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding

 Chart showing arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding


Source: CML Economics

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

Across all measures, mortgage arrears and repossessions are continuing to improve. We continue to see some amplification of the downward trend in repossessions, which may bring into question our repossessions forecast for 2015 as a whole.

This trend is very welcome. Low interest rates are acting as a significant support for home-owners in general, and are likely to be helping to stave off low level arrears for stretched households in particular. As ever, we urge borrowers to think ahead to when interest rates rise, and to contact their lender without delay if they are in difficulty - prompt action helps to prevent problems worsening.

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. We have changed the methodology used to compile CML arrears and possessions data, to improve the quality of the results.

Previously, we were using two separate surveys to produce the arrears and possessions dataset (and the number of mortgages outstanding). Over the past year we have successfully introduced a new single data return covering both owner-occupier and buy-to-let arrears and possessions. Lenders representing 94% of the market now contribute, and we gross up for the remainder of the market.

We are now publishing the arrears and possessions figures based on the new survey (including data Q2 2014-Q1 2015 that were previously published on the basis of the old methodology). This means that there is a break in the data series between Q1 2014 and Q2 2014, but figures are directly comparable back to Q2 2014.

3. For technical reasons relating to lenders' processes, the number of repossessions in the first and second quarters will be showing an overstated reduction. Subsequent quarters will therefore show a compensating effect, but the overall underlying trend is one of continuing gentle downward movement. Arrears numbers are unaffected.

4. 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.

5. 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.

6. CML arrears and repossessions data for the third quarter of 2015 will be published on Thursday 12 November 2015.


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