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Repossessions fall to record low

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Written by: christinahoghton
12/05/2016
Low interest rates and lender forbearance have led to the lowest repossession rates on record

There were 2,100 repossessions in the first quarter of 2016 (1,500 home-owner, 600 buy to let), according to the Council of Mortgage Lenders, taking the repossession rate to the lowest level on record.

The trade body said if this continued through 2016, it would put the annual number of repossessions at 8,400, lower than any year since 1982 – and in 1982 there were only 6.9 million mortgages, against 11.1 million mortgages today.

Mortgage arrears also fell in the first quarter, and the number of loans in arrears of 2.5% or more dipped below 100,000 for the first time in more than a decade, with 96,200 loans in arrears at the end of March, down from 101,700 at the end of December, and 111,200 at the end of the first quarter of 2015.

CML director general Paul Smee said: “We cannot completely avoid the risk of any individual household experiencing arrears or repossession. But lenders continue to work very effectively to help their borrowers through periods of difficulty when they do occur, and borrowers should be reassured that most cases of arrears can be resolved and will not lead to repossession.”

Homeowner v buy-to-let arrears

Arrears rates are higher among home-owners than buy-to-let landlords for the first quarter of the year, which is usual, but the repossession rate is lower. The CML explained that this is ‘because lenders will seek to avoid repossession wherever possible to enable home-owners to get over temporary periods of difficulty, whereas buy-to-let is a more commercial enterprise and lenders may move to protect their position more quickly on rental properties as tenants move out’.

Separate repossession figures from the Ministry of Justice today showed a broadly similar trend. It noted 4,738 mortgage possession claims in county courts between January and March, down 16% on the same time last year.

There were 3,208 orders for possession, 4,836 warrants of possession and 1,355 repossessions by county court bailiffs in January to March 2016 down 28%, 24% and 18%, respectively compared to a year ago.

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