The Council of Mortgage Lenders (CML) reports that the number of home repossessions has fallen to its lowest level in five years as a result of low mortgage rates and better debt management and relationships between lenders and borrowers.
The CML says that there was a total of 33,900 homes repossessed in 2012, a fall of nine per cent on 2011, down from 37,300 in 2011 and the lowest number since before the financial crisis and credit crunch of 2007.
This is lower than the figure predicted by the CML last year. It had predicted that due to the continued pressure on household finances the figure would be 45,000 before revising this down to 35,000 but the actual figures are even lower than that.
The trend looks set to continue in 2013 as repossession numbers also fell to 7,700 in the final quarter of 2012, the lowest quarterly figure for five years and down from 8,200 in the third quarter of 2012 to maintain a repossession rate of 0.07 per cent.
CML director general Paul Smee said: "The fall in arrears and possessions is obviously very welcome. Households fall into difficulty for a variety of reasons, most of which cannot be anticipated.
“Wherever possible, lenders will work with borrowers to manage periods of temporary financial difficulty and enable them to keep their home.
“Anyone worried about their situation should talk to their lender, who will try to help them."
The CML predicts that there will be a slight increase in 2013 to 35,000 repossessions.
The figures show that despite high inflation raising the cost of living and low wage increases, the benign conditions for mortgage borrowers are helping to reduce the problems facing homeowners.
Interest rates have been at an historical low of 0.50 per cent for almost four years now and the cost of a mortgage is at its lowest level as percentage of disposable income for over a decade.
There is unlikely to be a change in base rate for some time as the bank of England tries to provide the right conditions for economic growth.
This, combined with a more generous attitude from lenders on forbearance, has helped keep repossession rates down. The banks believe they have more chance of getting money back that they are owed if they allow homeowners to stay in their homes.
However, today’s figures from the CML show that there has been a slight increase in the number of cases of homeowners struggling with high levels of mortgage debt. The number of cases of people who have arrears of more than ten per cent of their mortgage debt increased from 28,200 at the end of 2011 to 28,900 at the end of 2012.
Meanwhile, the number of households with smaller levels of mortgage arrears has been falling overall since 2007. In the last 12 months the number of homeowners with arrears of 2.5 per cent or more fell from 161,400 to 157,900.
At the peak of recent mortgage arrears there were 216,400 repossessions in the 12 months to June 2009.
The CML advised that if you are in arrears on your mortgage, the best avenue to take is to speak to your lender and to ensure that communication is good so as to agree to resolve the issue over a reasonable timescale.
The CML said: “As the statistics demonstrate, lenders try to keep borrowers in their homes and only take possession as a last resort.”
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