| 5.5°C Belfast

Repossessions at lowest since 2006


Rock bottom interest rates have been credited with helping to keep people's repayments affordable

Rock bottom interest rates have been credited with helping to keep people's repayments affordable

Rock bottom interest rates have been credited with helping to keep people's repayments affordable

The number of households having their homes repossessed fell to its lowest level since 2006 in the first half of this year, mortgage lenders have reported.

New figures from the Council of Mortgage Lenders (CML) show that 5,400 properties were taken into possession in the second quarter of this year, marking the lowest number since quarterly records began at the start of 2008.

When this is added to the 6,400 repossessions which took place in the first three months of 2014, the half-year total of 11,800 is the lowest six-monthly tally recorded since the second half of 2006, the CML said.

Rock bottom interest rates have been credited with helping to keep people's repayments affordable, and the CML said that while the latest low repossession figures are "clearly welcome", borrowers should be planning now for how they will cope with rates increasing as the economy improves.

CML director general Paul Smee said the figures underline how borrowers, lenders and money advisers are working well together to contain payment problems.

He continued: "But rates will rise at some stage, of course, and borrowers should be planning for that now.

"We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of 'baby steps', matched to a careful assessment of the ability of households to deal with higher borrowing costs.

"Any borrower anticipating payment problems should talk to their lender as soon as possible.

"Today's figures continue to show that in many cases it is possible to work through a period of difficulty, with lenders committed to helping borrowers get their finances back on track."

Last month, the CML scaled back its forecasts for repossessions over the next couple of years.

It said in July that the prospect of interest rate rises "feels more imminent than six months ago", however "given a favourable jobs market, it seems reasonable to think that the majority of households will cope well with initial gentle rate rises".

The CML predicts about 25,000 repossessions will take place this year, which would mark a fall from 28,900 last year and is also down from its previous forecast at the end of last year of 28,000 repossessions in 2014.

It also forecasts repossession numbers to edge up slightly to 28,000 cases next year.

The CML's figures also show that the number of mortgages in arrears of 2.5% or more of the balance stood at 131,400 at the end of June, a total which is the lowest seen since the first quarter of 2008 and represents 1.18% of all mortgages.

The overall fall reflects smaller numbers of people in both smaller and higher levels of arrears, according to the CML, whose figures cover the whole of the UK.

Stricter mortgage lending rules came into force at the end of April under the Mortgage Market Review (MMR), which mean lenders now have to go into more detail about a mortgage applicant's spending habits and apply "stress tests" to make sure they could still afford their repayments when interest rates rise.

Yesterday, the Bank of England said it expects house price growth to halve by next spring, to around 0.5%, from the current rate of increase of around 1% a month.

The Bank's inflation report said: "Some borrowers may be reassessing their expectations about the likely cost of, or ease of access to, credit - partly in the light of reforms associated with the Mortgage Market Review."

The Bank also said that there is "more uncertainty about the path for the housing market in the near term" than there was a few months ago.

The CML's figures include the buy-to-let sector, which is also seeing a decline in arrears and repossessions. Some 1,300 buy-to-let properties were repossessed in the second quarter of this year, down from a figure of 1,400 recorded both in the first quarter of this year and in the second quarter of last year.

Housing Minister Brandon Lewis said: "Today's figures show how our work to tackle the deficit and keep interest rates low is helping more families to stay in their hard-earned homes."