CML data shows drop in arrears and possessions
Published by Brian Church for 24dash.com in Housing and also in Finance
Mortgage advances fall by 5% during November - CML
Good news tinged with a warning from the Council of Mortgage Lenders: Mortgage arrears and possessions continued to fall in the second quarter of 2014 but borrowers should plan now for rate rises.
CML data published today shows the number of mortgages in arrears of 2.5% or more of the balance stood at 131,400 (1.18% of all mortgages) at the end of June, down from 138,200 (1.24%) three months earlier and 154,900 (1.38%) a year ago. There was a fall in numbers across all arrears bands, and the overall total is now at its lowest since the first quarter of 2008.
A total of 5,400 properties (representing 0.05% of all loans) were taken into possession in the second quarter, down from 6,400 in the preceding quarter and 7,600 a year ago. At 11,800, the number of cases of possession in the first half of this year was at its lowest since the second half of 2006.
CML director general Paul Smee said: "Another fall in arrears and possessions is clearly welcome and shows that borrowers, lenders and money advisers are generally continuing to work well to contain payment problems where they arise, helped by an improving economy and low interest rates. 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 data is broadly in line with CML’srevised forecast of 135,000 mortgages in arrears at the end of 2014 (down from 150,000) and 25,000 cases of possession in the year (down from 28,000).
Jonathan Harris, director of mortgage broker Anderson Harris, said: "Repossessions continue to fall, while the number of borrowers in arrears has also declined. This is to be expected with rock-bottom interest rates and improving employment numbers, as well as lenders being prepared to be flexible and show forbearance.
"(But) what will happen when interest rates do start to rise? How will people cope? We suspect that when it comes to their finances there are many people teetering on a knife edge and rate rises could easily push them over. Any rise in interest rates must be gradual and we welcome indications from the Bank of England that this will be the case."
The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.2 trillion.
CML arrears and possessions figures are for the UK as a whole. No breakdown of data is available for the regions or for individual countries within the UK.