Low interest rates helping to keep repossessions and mortgage arrears down says CML

Taylor Scott International News

The UK is seeing a continuing reduction in the number of both repossessions and mortgages in arrears, across all categories, according to the latest figures from the Council of Mortgage Lenders for the third quarter of 2014. At the end of the third quarter, the proportion of mortgages with arrears equivalent to 2.5% or more of the total mortgage value was 1.12%, down from 1.18% in the second quarter and 1.33% in the third quarter of last year. This is the lowest proportion since the first quarter of 2008 when it was 1.08%. In numerical terms, this equates to 125,100 mortgages, down from 131,400 in the second quarter and 149,400 in the third quarter of 2013. The data also shows that the proportion of all mortgaged properties taken into possession by lenders was 0.04% (5,000 properties), the lowest quarterly proportion and number since quarterly records began in 2008. It compares with 0.05% (5,400 properties) in the second quarter, and 0.06% (7,200 properties) in the third quarter of 2013. Within the overall reported totals, both the owner occupier sector and the buy to let sector have experienced reductions in both arrears and repossessions. Out of the total 5,000 repossessions, 1,100 were on buy to let mortgages, unsurprisingly representing a slightly higher repossession rate of 0.07% in buy to let than the overall and owner occupier rate of 0.04%. ‘Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline,’ said CML director general Paul Smee. ‘Encouragingly, recent research also suggests that many households are preparing themselves for the prospect of higher interest rates, so we expect any uptick in payment difficulties to be relatively muted if and when rates do begin rising,’ he pointed out. ‘But a key activity for lenders now is considering how best to support their borrowers in planning ahead for a time when debt servicing costs are higher than they are now,’ he added. Meanwhile, separate statistics on England and Wales from the Ministry of Justice shows that the number of mortgage possession claims in County Courts increased from 62,862 in 2002 to a peak of 142,741 in 2008. Since then it has fallen 62% to 53,659 in 2013. The third quarter of 2014 (July to September), recorded 9,731 claims, representing the lowest quarterly figure recorded in over a decade. The fall in the number of mortgage possession claims since 2008 coincides with lower interest rates, a proactive approach from lenders in managing consumers in financial difficulties and other interventions from the government, such as the Mortgage Rescue Scheme, which was in place from January 2009 to March 2014. At the same time as the number of claims rose (between 2002 and 2008), the estimated proportion of claims which progressed to an order, warrant or repossession by county court bailiffs also increased. However, the trend in more recent years has been one of decline while the estimated percentage of claims progressing to an order, warrant or repossession in 2008 was… Continue reading →

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