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Repossessions fall to five-year low

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The number of properties repossessed by lenders fell from 8,000 in Q3 2012 to 7,700 in Q4, according to the Council of Mortgage Lenders (CML).

This was the lowest quarterly figure since the credit crunch struck in Q4 2007, and represents a repossession rate of 0.07% of mortgaged properties.

Annually, the number of properties repossessed dropped from 37,300 in 2011 to 33,900 in 2012 – the lowest annual figure since 2007.

Arrears figures also fell, with 157,900 households in arrears of 2.5% or more of the mortgage balance at the end of 2012, compared with 161,400 households at the end of 2011 (and 216,400 at the peak of the current arrears cycle at the end of the first half of 2009).

In total 1.4% of mortgaged households were in arrears at the end of 2012, a rate which has remained consistent for two years. However, while the number of households in low arrears bands has fallen steadily since 2007, the number with serious arrears of more than 10% of their mortgage balance has grown slightly, from 28,200 at the end of 2011 to 28,900 at the end of 2012, and the CML points out that these are the hardest cases to help get back on track.

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.”

Jonathan Harris, director of mortgage broker Anderson Harris, added:

“Although the number of repossessions fell in the fourth quarter compared with the third, many households are still struggling financially. While base rate is expected to stay at 0.5% for the foreseeable future, there are thousands of people who have already got into difficulty and are struggling to get out of it.

“It is essential that lenders continue to show forbearance and look after customers who are struggling by switching them to interest only, allowing them to take payment holidays or extend their mortgage terms, where practical. Likewise, borrowers must seek help, preferably before they miss a payment, speaking to their lender or one of the specialist – and free – debt agencies, such as Citizens Advice Bureau.”