However, it warned the Government not to be complacent, as a large number of households are still in a vulnerable economic position.
CML figures show that the number of repossessions fell to 9800 in Q1 compared to 10,600 in the previous quarter and 13,200 in Q1 2009. As a proportion of all mortgages, repossessions fell to 0.09% from 0.12% last year.
The CML has not amended its repossessions forecast from 53,000 for the year given the economic uncertainty, but expects to revise down its estimate this summer. It believes this figure to be ‘pessimistic’ if the economic situation remains the same.
The number of mortgages in arrears also fell, to 186,300 from 206,800 in Q1 2009 and 196,400 in Q4 last year. The total proportion of loans with arrears of 2.5% or more of the mortgage balance was 2.38%, down from 2.81% in Q1 2009.
However, the fall was more notable in the lower arrears band, suggesting that those with more substantial arrears, where the reduction was modest, are still struggling to recover.
Bernard Clarke, spokesman for the CML, said: “We are at a historic level of low interest rates and people have adjusted their finances to that. What we have seen is more encouraging than we anticipated, but there is an awful lot of uncertainty out there and we’re warning against complacency.
“We lowered our repossession forecast twice last year, but it’s not necessarily a one-way bet; there are still things that could knock people off their stride. We have seen great benefits delivered by lower interest rates, but they can’t get any lower and the next move will be upwards, maybe around the fourth quarter of this year.”
David Hollingworth, head of communications for London & Country Mortgages, commented: “We’re not out of the woods yet, as there are questions around whether unemployment will rise. The most encouraging thing is that clearly lenders have looked to play their part and show greater forbearance.
“The situation has not snowballed as badly as we thought it might, but we should not be complacent.”
