The number of second charge mortgages repossessed in 2016 was 144 – about 37% fewer than in 2015 and the lowest number since the 2008 financial crisis.
According to the FLA, there were 34 repossessions in Q1 (down 53% year-on-year); 40 in Q2 (-40%); and 31 in Q3 (-45%). The FLA said the end result could have been a lot better had repossessions not spiked in the last quarter of the year, when 39 properties were reclaimed, up 18.2% on the same quarter in 2015.
As a result of the decline, the rate of second charge mortgage repossessions, as a percentage of average outstanding agreements, fell from 0.34% in 2009 to 0.07% in 2016.
The FLA attributed the overall improvement to a change in the way lenders dealt with customers in difficulty.
Head of consumer and mortgage finance, Fiona Hoyle, said: “Supporting customers in financial difficulty remains a priority for the second charge mortgage market. This is reflected in the low number of repossessions reported in 2016. We expect the number of second charge mortgage repossessions in 2017 to be at a similar level to 2016.”
Last year saw the regulation of second charge mortgages migrated to the Financial Conduct Authority (FCA), which brought it in line with the first charge mortgage regime.
As part of this change, lenders fell under the FCA’s Mortgage Conduct of Business (MCOB) rules instead of the consumer credit regime, which introduced additional protections for consumers.