Lowest number of properties repossessed since 2007

Robyn Hall

November 8, 2012

A total of 8,200 properties were taken into possession in the third quarter down from 8,500 in the second quarter and 9,600 at the same time last year.

This marked the lowest number of properties taken into possession in a single quarter since 2007.

And the number of mortgages in arrears remained stable in the third quarter. At the end of September the total number of mortgages with arrears of 2.5% or more of the outstanding balance rose slightly to 159,100 up from 158,700 in the previous quarter but still down on the 165,300 in arrears in the same period last year.

Levels of arrears in the lower and middle bands remained consistent with the previous three months but there was a small increase, from 28,600 to 29,000, in those mortgages with the highest levels of arrears – more than 10% of the balance.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that while the low number of repossessions is encouraging it is important that complacency does not creep in.

He said: “Although interest rates are expected to remain at 0.5% for the foreseeable future some borrowers are still struggling to afford their mortgage as living costs continue to rise and many lose their jobs.”

In total 26,300 properties were repossessed in the first three quarters of 2012 which is 8% fewer than in the first three quarters of last year. In the buy-to-let sector the repossession rate equated to 0.13% compared to 0.06% in the owner-occupier sector.

In the buy-to-let sector repossession is only likely to occur at the end of an agreed tenancy when the landlord is in arrears. In the owner-occupier sector repossession is a last resort and the low rate of repossession reflects significant lender forbearance.

CML director general Paul Smee said: “Our figures showed that good communication and effective arrears management by borrowers, lenders and money advisers are helping the vast majority of those with mortgage repayment problems. The rate of repossession has continued to fall and it’s clear that lenders want to keep people in their homes.

“Repossession really is a last resort but it’s essential for anyone worried about their mortgage to talk to their lender as soon as possible. It is more difficult to resolve problems when they are not tackled early.”

And Harris added: “Lenders must continue to show forbearance and look after customers who are struggling by letting them switch to interest only, take payment holidays or extend their mortgage terms. The Mortgage Market Review should assist in this including a proviso that lenders continue to assist mortgage prisoners which should help keep repossession rates down.

“But borrowers must also do their bit ideally seeking help before they miss a payment.”

Mark Blackwell, managing director of xit2, said: “Lower repossession rates are certainly positive news for homeowners. This shows lenders are striving to be flexible and understand their customers’ detailed circumstances. With this approach, repossession rates are now less than half their 2008 level (down 56%), and the same as in 1999. But repossessions won’t show the sustained falls that came with the new millennium. October 2012 is probably the beginning of the end of the latest good news.

“Many lenders are now increasing SVRs in line with inevitable base rate rises and tighter money markets. Flat overall arrears levels are impressive in the circumstances, but there are now 48% more borrowers in long-term arrears than there were in mid-2008. This is the fourth consecutive quarter where serious arrears cases have increased, but repossessions continue to head in the opposition direction. It’s counter-intuitive, and a trend that can’t possibly continue indefinitely”.

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