Mortgage arrears continue to fall in third quarter
Published: 12 November 2015
Latest data from the Council of Mortgage Lenders show a continuing decline in arrears and repossessions stable in the third quarter of 2015. The quarterly repossession and arrears rates are once again at their lowest levels since the CML's quarterly records began.
There were 2,500 properties taken into possession in the third quarter, the same number as in the second quarter, and 50% down on the 5,000 reported in the third quarter of 2014, although caution is needed in making comparisons. (see note 3 to editors).
Chart 1: Repossessions, buy-to-let and owner-occupied markets
There were 104,600 loans (0.94% of all mortgages) with arrears representing more than 2.5% of the mortgage balance at the end of September. This was 14% lower than at the same point in 2014, and nearly 2% lower than at the end of the second quarter. The number of loans in all arrears bands was down apart from the most serious band of 10% or more, where the number was slightly up from 23,300 last quarter to 23,700 this quarter but still nearly 7% lower than the 25,400 at the end of September last year.
Chart 2: Arrears on mortgages, 2.5% or more of balance outstanding
This is the second quarter in which the CML is able to publish fully consistent data on arrears and possessions across both the owner-occupier and the buy-to-let markets. Of all loans with arrears of more than 2.5% of balance, 99,000 were owner-occupier (down from 100,700 last quarter), and 5,700 buy-to-let (the same as last quarter).
Chart 3: Arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding
Commenting on the data, CML director general Paul Smee said:
Supported by low interest rates and an improving jobs market, mortgage arrears continue to fall and repossessions are stable. Lenders are committed to working with borrowers to resolve their financial difficulties rather than take possession wherever this is realistic.
Looking ahead, there is possibly a risk that people will postpone thinking about the prospect of higher payments as the timing of rate rises continues to stretch beyond previous expectations. But we would urge all borrowers to plan ahead, as prevention is better than cure.
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. In Q2 2015 we 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. The current underlying trend for repossessions is one of continuing gentle downward movement. For technical reasons relating to lenders' processes, the number of repossessions in 2015 so far show an overstated reduction. This is likely to continue into the fourth quarter of this year but is expected to unwind progressively in 2016. Subsequent quarters will therefore show a compensating effect. 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 gov.uk 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 fourth quarter of 2015 will be published on Thursday 11 February 2016.