The report said that 8,200 properties were taken into possession during the three month period between July and September, a fall from the figure of 9,600 posted for the same period last year.

This was the lowest quarterly number of properties repossessed since 2007, the CML said that significant usage of forbearance by lenders had kept repossession figures low.

Figures released by the Ministry of Justice today said that the number of possession claims, recorded when a claimant begins the legal process to repossess a property, were also down. It said 15,050 mortgage possession claims were issued in the second quarter of 2012 less than half the level seen during 2008.

The MoJ estimates that around 69% of mortgage possession orders led to actual repossessions, a sharp rise on the 44% conversion rate seen in 2008.

The CML number of mortgages with more than three months in arrears was 218,400 at the end of the quarter, the lowest number in four years.

However, there was an increase in the number of mortgages with arrears totalling more than 10% of the outstanding balance with 29,000 cases noted in the report. The number of mortgages with arrears of over 2.5% fell year-on-year to 159,100.

CML director-general Paul Smee commented: “Our figures show that good communication and effective arrears management by borrowers, lenders and money advisers are helping the vast majority of those with mortgage repayment problems. The rate of repossession has continued to fall and it’s clear that lenders want to keep people in their homes.”

Richard Sexton, director of e.surv chartered surveyors, said: “Long-term arrears have risen yet repossessions are down, which is thanks to lenders’ generous forbearance policies.

“The issue is whether this is a sustainable approach in the long-term. This is the fourth quarter in a row where arrears of 10% or more have increased, yet repossessions have remained broadly flat.

“Banks won’t be able to go on absorbing long-term arrears into their balance sheets infinitely, and they also have a duty of care to ensure borrowers don’t build up ‘too much’ debt by allowing them to stay in a property if this is unsustainable.”