Arrears and repossession down but worse to come

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by Gill Montia

Last year 36,200 homes were taken back by first-charge mortgage lenders, the lowest annual total since 2007, according to the Council of Mortgage Lenders (CML).

Buy-to-let properties accounted for 5,900 repossessions in 2011, up from 4,700 in 2010.

However, arrears improved across both the buy-to-let and owner-occupier sectors and as 2011 drew to a close, there were 159,400 mortgages in arrears (equivalent to 2.5% or more of the mortgage balance) down from 172,400 at the end of 2010.

Surprisingly, given the repossession figures, arrears were higher among owner-occupiers (2.06%) than among buy-to-let mortgage holders (1.38% if receiver of rent cases were excluded; 1.79% if included).

Despite the improvements, there is little cheer looking ahead as the CML has no plans to revise its current 2012 forecasts.

Lenders are bracing themselves for higher unemployment and greater cost of living pressures which they expect to result in around 45,000 repossessions and around 180,000 mortgages in arrears by Christmas.

Commenting on the figures, CML director general, Paul Smee, says: “Low interest rates and good arrears management by lenders are helping the vast majority of those borrowers who face difficulties to keep their homes and get back on track.”

He adds: “This will continue, but in the face of wider economic difficulties and rising unemployment, we are concerned that there will be a higher number of people facing more serious problems in 2012.”