However, possessions reached 46,000 in 2009, their highest level since 1995. 

Although the 2009 possession figures were significantly fewer than the 75,000 which was forecasted at the start of 2009, they were still 15% higher than the 40,000 which were recorded in 2008.

The CML has admitted that its current 2010 forecast of 205,000 arrears cases and 53,000 possessions may be a little pessimistic, given that unemployment is faring better than expected so far.

Michael Coogan, director general of the CML, said: “The fact that mortgage arrears and possessions did not rise as much as we feared in 2009 is testament to the effect of low interest rate and a great deal of concerted effort by lenders, government and the advice sector to help borrowers to address financial difficulties when they occur.”

He added that 2010 will still be a challenging year for many borrowers and some households will inevitably find their finances being squeezed if interest rates do rise.

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Brian Murphy, head of lending at Mortgage Advice Bureau, welcomed the 2009 arrears and possesion figures as they were far lower than were originally expected.

He said: “A benign interest rate environment, increased lender forbearance in the face of moral and political pressure and lower than expected unemployment levels have all helped people to keep their homes.

However, he added: “Of course, if rates were to rise materially then we could see an increase in arrears and repossessions in the future. It’s essential that anyone who is beginning to struggle with their repayments gets in contact with their lender straight away in order to find a solution. The worst thing to do is stick your head in the sand.”

The CML also revealed that buy-to-let lending slipped to an eight-year low in 2009.

It represented only 5.9% of all lending in 2009 despite new buy-to-let lending increasing for the second consecutive quarter in Q4 2009. Gross buy-to-let lending was £8.5bn, down from £27.2bn in 2008.

There were 25,800 new buy-to-let loans advanced in Q4, up from 23,700 in Q3 but down from the 38,000 advanced in Q4 2008. Gross buy-to-let advances totalled £2.4bn in Q4, up £300m from Q3 but down £1.6bn from Q4 2008.

For 2009 as a whole, there were 93,500 buy-to-let loans advanced, which was a huge 58% down on the number advanced in 2008.

The Ministry of Justice also revealed that courts in England and Wales issued 42% fewer mortgage possession orders in Q4 2009 compared with a year earlier.

There were 16,928 orders for home repossession in Q4, 15% lower than in Q2. However, as 46% of orders were suspended, the total number of actual home repossessions was lower.

The figures also showed that the Government Mortgage Rescue Scheme has helped 276 households since it launched in January 2009 while 182 households accepted an offer through the scheme in Q4 2009.

John Healey, housing minister, said: “More than 15,000 households have received free advice from their local authority since January 2009, with over 1100 receiving tailored information, or referral to their lender or independent money adviser between October and December.

“In the last three months, over 9,000 cases facing legal action were seen by court desk advisers, of which over 7,500 had the immediate risk of losing their home lifted – meaning four out of every five struggling households advised were able to stay in their homes beyond the hearing.”