Today’s arrears figures from the Council of Mortgage Lenders (CML) show that arrears fell slightly in the first quarter. They are also lower than the previous quarter and the same period last year. There were 92,600 mortgages in arrears, representing 0.84% of all mortgages, the lowest quarterly rate on record.
Arrears fell in all bands except one: cases with arrears of over 10% of the mortgage balance rose to 26,500. Although this is a small number within the total mortgage market, the CML said it suggests that there is a small group of borrowers for whom arrears are worsening.
The number of properties taken into possession was also 10% down on a year ago (though up on the fourth quarter, reflecting a usual seasonal pattern). In total, 1,900 properties were taken into possession – the eighth successive quarter of a repossession rate of 0.02%.
The buy-to-let arrears rate remains lower than the owner-occupier arrears rate, but the repossession rate remains higher. This reflects the high level of forbearance that lenders typically extend to home-owners to try to help them keep their homes.
Paul Smee, CML director general, said the figures were positive, but may depend on low interest rates and unemployment.
“This positive picture of mortgage performance is good news, and reflects a continuing benign interest rate and employment environment. However, it is important that borrowers continue to think about the future, and how they would cope with less positive conditions, even if that scenario seems distant.”
Brian Murphy, head of lending for Mortgage Advice Bureau, agreed that borrowers need to plan for a less favourable environment.
“What with everything that’s currently occurring in terms of political and economic climate, borrowers do need to factor into their household budgets that interest rates will, at some point in the future, move upwards.
“Those who are currently on a variable rate with their lender may wish to take advantage of the record low fixed interest rate deals available to cap their mortgage payments.”
However, he added that the figures demonstrate that lenders only use repossession as a last resort, and will make arrangements, such as reduced mortgage payments or payment holidays for a short period.