Mortgages  

Repossession numbers hit 9-year low: CML

Repossession numbers hit 9-year low: CML

The number of repossessions have hit a nine-year low of 0.19 per cent last year, data from the Council of Mortgage Lenders has revealed.

The number of repossessions fell to 21,000 in 2014 - 26 per cent fewer than the 28,900 in 2013 and the lowest number since 2006, according to the data.

Out of the 21,000 total, 16,100 were on owner-occupied properties and 4,900 were on buy-to-let properties.

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At 0.3 per cent, the repossession rate on buy-to-let mortgages was higher than the 0.17 per cent on owner-occupier loans, despite the fact that the underlying arrears rate was lower on buy-to-let lending than on home-owner lending.

The CML stated that this was unsurprising, as lenders offer extended forbearance to owner-occupiers to help them get through periods of financial difficulty without losing their home.

There were also fewer mortgages in arrears at the end of 2014 than at any time since 2006 - 1.05 per cent of all mortgages were in arrears, equivalent to 2.5 per cent or more of the mortgage balance - down from 1.29 per cent at the end of 2013.

The two main traditional drivers of mortgage difficulty are income shocks, such as unemployment, and interest rates, according to the industry body.

Both factors are relatively benign at present, assisting the welcome decline in both arrears and repossessions, supported by effective lender practices.

Paul Smee, CML director general, commented that the relatively low rate of repossession among owner-occupiers should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems.

“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.”

Jonathan Harris, director of mortgage broker Anderson Harris, said that the downward trend for repossessions and the number of borrowers in arrears is to be expected with historically low interest rates and improving employment numbers.

“However, there are still tens of thousands of homeowners being repossessed each year, which begs the question: what will happen when interest rates do start to rise? How will people cope?

“We suspect that when it comes to their finances there are many people teetering on a knife edge and rate rises could easily push them over. Interest rate rises are inevitable at some point; when they come, they must do so gradually.

“Thankfully the Bank of England has suggested that this will be the case.”

peter.walker@ft.com