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Repossessions and arrears hit lowest levels in years

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  • 11/02/2016
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Repossessions and arrears hit lowest levels in years
Almost 5,600 properties were repossessed in 2015, a decline of 53% compared to the year before and the lowest figure since 1987, according to data from the Ministry of Justice.

The last quarter of 2015 saw 1,150 repossessions, also down 53% compared to 2014. When the figures are seasonally adjusted, 1,169 repossessions were made in Q4, a 16% decline from 1,394 compared to the previous quarter.

The Ministry of Justice said the fall in mortgage possession actions could be linked to lower interest rates, lenders’ proactively supporting consumers’ in managing financial difficulties, and help from the government through schemes such as the Mortgage Rescue Scheme.

Second-charge mortgage repossessions fell by 49% to 228 in 2015, the lowest figure for at least seven years, according to figures from the Finance and Leasing Association (FLA). Q4 2015 saw a drop of 58% compared to the same time the year before.

The number of arrears has fallen to 0.92%, the lowest in a decade, with less than one in 100 mortgages in arrears, according to figures from the Council of Mortgage Lenders (CML). Owner occupied mortgages represented 1.03% of the total loans, with buy-to-let standing at 0.31% for the year.

The highest bracket, with arrears of more than 10% of the balance, fell to 23,700 from 24,200 the year before.

Paul Smee, director general of the CML, said: “Of course it is good news that the levels of mortgage arrears and repossessions remain low and falling.

“But, at the risk of sounding as if we are crying wolf, we would continue to urge all borrowers to plan ahead for a time when the interest rate environment may be less benevolent. Lenders do not wish to see borrowers who are coping currently falling into difficulty if and when rates do eventually rise,” he said.

Jonathan Harris, director of Anderson Harris, said the figures reflect rock-bottom interest rates,
improving employment figures and lenders’ flexibility.

“However, there is no room for complacency. There are still many homeowners being repossessed or finding themselves in arrears on their mortgage each year, which begs the question: what will happen when interest rates start to rise? How will people cope? We suspect that when it comes to their finances there are many people teetering on a knife edge and rate rises could easily push them over,” he said.

Just over a quarter of borrowers would have real difficulty paying their mortgage if their monthly repayments went up by £99, according to a survey by TSB.

 

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