CML: 2014 repossessions fall 26pc
There were 21,000 cases, down from 28,900 in 2013, while the reposession rate stood at 0.19%.
Paul Smee, CML director general, said: “The relatively low rate of repossession among owner-occupiers – around one in 600 mortgages last year – should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort.
“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.
“It’s essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise.”
Of the 21,000 repossessions, 16,100 were on owner-occupied properties and 4,900 were on buy-to-let homes.
At 0.3%, the repossession rate on buy-to-let was higher than the 0.17% on owner-occupier loans.
Lenders are generally considered to be more lenient with owner-occupiers to help them get periods of financial struggle with their homes intact.
Stephen Smith, director at Legal & General Mortgage Club and Housing, said: “There’s a misconception amongst borrowers that a lender will immediately resort to repossession if they even mention they are struggling to make repayments.
“In reality, it’s in a lender’s best interest to keep a roof over their customers’ heads and so in the vast majority of cases they will work with a borrower to find a solution to problems arising from arrears.
“The important thing is that customers shouldn’t be afraid to speak to their lenders as they will be more sympathetic to your struggles than you may think.”
Richard Sexton, director of e.surv chartered surveyors, added: “People all across England and Wales have a firmer grasp of their finances compared to a year ago and the Bank of England continues to hold interest rates low, which has been a real boon to those who are already on the housing ladder – allowing them the chance to pay down debts whilst accessing cheaper mortgage repayments.
“At the same time, wage growth has outpaced inflation for the first time in five years, meaning the cost of living squeeze has started to ease.
“This really boils down to people having more money in their pockets than a year ago.
“Savers may have suffered while the base rate has stayed low, but for those on the edge of the repossessions cliff, it has allowed them the respite needed to claw back their finances and move back into financial security.
“Moving forwards, the Mortgage Market Review will ensure that future borrowers are able to keep up with repayments, despite fluctuations in interest rates.”