There were 7,700 cases of possession last year – the lowest number since 1982. The reduction follows a dramatic drop in 2015, when possessions halved to 10,200 from 20,900 in 2014.
The CML said the impact of the 2014 Bank of Scotland vs Rea court case may still be affecting the number of repossessions as lenders have been forced to change their processes on how they handle arrears. The case dealt with the way arrears were treated by the bank – claiming the practice of adding them to the loan was effectively double billing.
A CML spokesman said it is possible figures could rise to around 10,000 again if there are cases that have been held up while the position was clarified.
However, over the course of 2016, the number of mortgages in arrears also fell by 7%. At the end of the year, there were 94,100 mortgages with arrears of 2.5% or more of the outstanding balance, a slight increase on the total of 93,300 at the end of the third quarter. That compared to a total of 101,700 at the end of 2015.
The number of possession cases declined in the fourth quarter of 2016, as well as over the year as a whole. In the final three months of the year, 1,800 properties were taken into possession, down from 1,900 in the preceding quarter and 2,200 in the final quarter of 2015.
CML director general Paul Smee said low interest rates continue to help borrowers. “It is encouraging to see another improvement in arrears and possessions during a year in which borrowers were clearly helped by the downward trend in mortgage rates,” he said.
“But customers do need to be ready for a time when the outlook may not be so benign, with pressure on real incomes increasing and as interest rates begin to move upwards again. Lenders remain committed to helping borrowers work through any period of temporary payment difficulty and remain in their home wherever possible.”
Across the market as a whole, there was significant improvement last year in the number of mortgages with more modest levels of arrears (up to 5% of the outstanding balance). There was, however, an increase over 2016 in the number of mortgages with arrears of more than 10% of the balance, from 23,700 to 26,000.
The CML said this figure may also have been distorted by the timing of possession actions.
In the buy-to-let sector, the number of mortgages in arrears was unchanged in the fourth quarter of last year, at 5,000, but 11% lower than at the end of 2015 (5,600). The number of owner-occupier mortgages in arrears edged upwards in the final quarter of last year, from 88,300 to 89,200, but was lower than the total at the end of the previous year (96,200).
The number of buy-to-let properties taken into possession in the final quarter of last year was unchanged, at 600, but lower than in the last three months of 2015 (700). In the final quarter of 2016, a total of 1,200 owner-occupied properties were taken into possession, down from 1,300 in the preceding quarter and 1,500 in the final three months of 2015.