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CML data shows fall in repossessions and arrears

The number of repossessed property in the first quarter of 2016 is the lowest on record, according to new data from the Council of Mortgage Lenders (CML).

The CML has reported that there were 2,100 repossessions in the first quarter of this year comprising 1,500 home-owner and 600 buy to let properties.

It also goes on to state that if this rate continues through 2016 it would put the annual number of repossessions at 8,400, the lowest rate since 1982 (however in 1982 only 6.9 million mortgages existed, as opposed to 11.1 million mortgages today).

The CML’s report also points to a decline in mortgage arrears.

In the first quarter of 2016, the number of mortgages in arrears of 2.5% or more fell below the 100,000 mark – the first time this has happened in over a decade.

At the end of March 96,200 loans were in arrears, down from 101,700 at the end of December, and 111,200 at the end of the first quarter of 2015.

The most serious arrears band of 10% or more, which has remained fairly static while the lower arrears bands have declined, also fell slightly this quarter.

The decline in mortgage arrears and repossessions in recent years runs contrary to what is being experienced in the rental sector.

Separate data from the Ministry of Justice, based on court activity, shows that eviction rates are much higher in the rental sector (especially in the social rented sector) than in the mortgaged property sector.

In 2015, 42,728 rental evictions were carried out by county court bailiffs, in comparison to 5,594 mortgaged property repossessions, even though the rented sector accounts for only around a third of the housing stock.

The CML’s report also reviews activity in both the home-owner mortgage market and the buy to let market.

It finds that, as usual, arrears rates are higher among home-owners, than buy to let landlords, but that repossession is lower.

It explains this as being down to the fact that lenders seek to avoid repossession wherever possible to enable home-owners to get over temporary periods of difficulty.

Buy to let, on the other hand, is seen as a commercial enterprise and lenders may move to protect their position more quickly on rental properties, as tenants move out.

Paul Smee, director general, CML 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. The key to dealing with difficulty is to tackle it early, and to communicate with your lender as soon as you think you may be facing problems.”