According to its latest mortgage lending data the number of possessions in the quarter continued to decline, decreasing by 10% to 8,246.
Arrears totalling £40m on 13,764 accounts were capitalised in Q4, but the number of new arrears cases was 38,800 in the last quarter, up 6% from Q3 2010.
The total number of accounts in arrears at the end of 2010 was 343,400, unchanged from the last quarter.
The proportion of the residential loan book that is in arrears changed little, at 2.95%.
The FSA data also showed that new advances in the last quarter totalled £37bn, 10% lower than in Q3 and 11% down on the amount advanced in Q4 2009.
New commitments totalled £35bn, 9% down on last quarter and also down on Q4 last year.
Lending for house purchase accounted for 61% of new advances and 55% of new commitments, while the proportion of new lending done at an LTV of more than 90% accounted for just over 2% of new advances.
The proportion of loans to borrowers with an impaired credit history was 0.3%, as it has been since Q3 2009.
Meanwhile, the latest house price index from the Department for Communities and Local Government (DCLG) showed that UK house prices increased 0.5% in the year, but fell 1.4% in January 2011.
The DCLG reported that the average house price was 0.4% lower over the quarter to January, compared to a quarterly decrease of 0.2% over the quarter to October.
Prices paid by first-time buyers were 1.5% higher on average than a year earlier whilst prices paid by former owner occupiers increased by 0.1%.
Nicholas Ayre, a director of buying agents, Home Fusion said: “The 1.4% decline in January does seem indicative of the direction house prices will go during 2011, namely down.
“At best, the market will remain flat this year; at worst it is heading for further falls, especially in areas where unemployment is rising sharply.
“Supply has slowed in recent weeks, easing the pressure on prices, but this could change rapidly when interest rates rise,” he explained.
