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Mortgage possessions down again in fourth quarter of 2016

Published: 9 February 2017

The number of properties taken into possession last year declined by almost 25%, according to new data from the Council of Mortgage Lenders. Last year's total of 7,700 cases of possession compared with 10,200 in 2015, and was the lowest number since 1982. Over the course of 2016, the number of mortgages in arrears also fell by 7%.  

However, although the data show a clear underlying downward trend in the number of possessions, some care is needed in making annual comparisons. The timing of some possessions last year may have been affected by a court case that caused lenders to review their processes.

The number of possession cases declined in the fourth quarter of 2016, as well as over the year as a whole. In the final three months of the year, 1,800 properties were taken into possession, down from 1,900 in the preceding quarter and 2,200 in the final quarter of 2015.

Chart 1: Number of possessions, buy-to-let and owner-occupied markets

20170209 - chart 1 number of possessions, buy-to-let and owner-occupied markets

Source: CML Economics

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At the end of last year, there were 94,100 mortgages with arrears of 2.5% or more of the outstanding balance, a slight increase on the total of 93,300 at the end of the third quarter. But that compared to a total of 101,700 at the end of 2015.

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

20170209 - chart 2 arrears on mortgages, 2.5% or more of balance outstanding

Source: CML Economics

Download the data

Across the market as a whole, there was significant improvement last year in the number of mortgages with more modest levels of arrears (up to 5% of the outstanding balance). There was, however, an increase over 2016 in the number of mortgages with arrears of more than 10% of the balance, from 23,700 to 26,000.  But this figure may also have been distorted by the timing of possession actions.

In the buy-to-let sector, the number of mortgages in arrears was unchanged in the fourth quarter of last year, at 5,000, but 11% lower than at the end of 2015 (5,600). The number of owner-occupier mortgages in arrears edged upwards in the final quarter of last year, from 88,300 to 89,200, but was lower than the total at the end of the previous year (96,200).

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

20170209 - chart 3 arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding

Source: CML Economics

Download the data

The number of buy-to-let properties taken into possession in the final quarter of last year was unchanged, at 600, but lower than in the last three months of 2015 (700). In the final quarter of 2016, a total of 1,200 owner-occupied properties were taken into possession, down from 1,300 in the preceding quarter and 1,500 in the final three months of 2015.

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

  It is encouraging to see another improvement in arrears and possessions during a year in which borrowers were clearly helped by the downward trend in mortgage rates. But customers do need to be ready for a time when the outlook may not be so benign, with pressure on real incomes increasing and as interest rates begin to move upwards again. As ever, borrowers who fear they may miss a payment should speak to their lender. Lenders remain committed to helping borrowers work through any period of temporary payment difficulty and remain in their home wherever possible.

 

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 possession data, to improve the quality of 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 cases of possession is downwards but, for technical reasons relating to lenders' processes, the number of cases in 2015 and 2016 show an overstated reduction. This may now begin to unwind, with subsequent quarters showing a compensating effect.

4. CML arrears and possessions figures are for the UK as a whole. There is no breakdown of data for English regions or individual countries within the UK. 

5. The Ministry of Justice's mortgage and landlord possession statistics can be found on the gov.uk website. These include quarterly national statistics on possession claim actions in county courts by mortgage lenders and social and private landlords.

6. CML arrears and possessions data for the first quarter of 2017 will be published on Thursday 11 May 2017.

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