There was a continuing reduction in the number of both repossessions and mortgages in arrears, across all categories during the third quarter of 2014.
The Council of Mortgage Lenders (CML) said that 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 (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.
During the third quarter, the proportion of all mortgaged properties taken into possession by lenders was 0.04% (5,000 properties). This is 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%.
Paul Smee, the CML’s director general, said: “Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline.
“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. 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.”
