The trade body said the decision as taken in recognition of lender forbearance, government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.

In Q3 2009, CML figures show that the number and proportion of mortgages in arrears both fell, despite the bleak economic backdrop.

At the end of September 194,600 mortgages, 1.77% of the total, were in arrears of 2.5% or more of the outstanding mortgage balance compared with 204,200 cases (1.86% of all mortgages) at the end of June.

Meanwhile 11,700 properties were taken into possession in Q3, up slightly from 11,400 in the previous quarter, and 5% higher than the number in Q3 2008, but still lower than the 12,700 in Q1.

Around a quarter of the possessions in Q3 took place without a court order.

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Michael Coogan, director general at the CML, said: “We are glad to have been wrong on our previous forecast for mortgage repossessions this year. Low interest rates, and lenders’ forbearance policies, have helped to cushion many households facing financial problems. And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time.”