Repossession levels falling

The CML also announced the results of consumer research which found that 42 per cent of all mortgage holders now claim to have an insurance policy that would cover their mortgage repayments should they become sick. 31 per cent of borrowers apparently have mortgage payment protection insurance, 19 per cent have critical illness cover and 7 per cent permanent health insurance.

However, only MPPI covers against unemployment and so 69 per cent of borrowers still have no cover against unemployment.

Peter Williams, deputy director general of the CML, said: "Economic stability, low interest rates and high levels of employment have been major factors influencing the substantial reduction in mortgage repayment difficulties over the past year. The CML and lenders are also actively working towards a holistic approach to ensure that home ownership remains sustainable for people who choose it. This relies on a mixture of responsible lending, good arrears management, effective risk assessment and measures such as private insurance to offset risk and State support to help those in the worst cases of difficulty.

"We are continuing to work with the insurance industry and the Government to seek further improvements and refinements to the overall package of safety net measures available to help home-owners. In particular, we think that better targeted State support has an important role to play in complementing borrowers' and lenders' actions to reduce the risk of mortgage arrears."