Repossessions at lowest level since 1982

The number of repossessions of properties made by mortgage lenders in 2003 was at its lowest level since 1982, according to a report out today from the Council of Mortgage Lenders (CML). The number of people in arrears on mortgage payments was also the lowest seen since the early 80s.

One in 1,500 mortgaged homes was repossessed in 2003, a total of 7,630 properties. However, with increases in interest rates expected over the course of the year, CML expects these figures to rise. The organisation is predicting the number of repossessions to reach 8,500 in 2004, in line with 2002 levels, and 11,000 in 2005.

The CML director general, Michael Coogan, warned borrowers and lenders alike to take a responsible approach to borrowing: "With such low levels of default, both lenders and borrowers need to make a conscious effort to think about risk. The current economy may not last forever.

"Although most people should be able to weather the anticipated rise in interest rates without too much difficulty, there will be a small number who will struggle, especially those with large unsecured debts and little equity in their property. Now is definitely the time for people to be preparing themselves to absorb higher mortgage costs later this year," said Mr Coogan.

A separate report from the British Bankers' Association (BBA) today revealed that total mortgage lending remained "strong" in December 2003. Loans were up 8% by number and some 26% by value compared with the same month the previous year.

Consumer borrowing increased in line with the recent trend, rising by ?0.7bn in December, but borrowing on credit cards was "subdued". British consumers borrowed 13% more than they did in the previous December, but repayments were also higher, so that the increase in card borrowing in December was less than half that seen in the previous two years.

David Dooks, director of statistics at the BBA, said: "Lending growth looks set to remain buoyant into the early part of this year. By contrast, it is not clear whether consumer credit will follow suit.

"November and December rises in card borrowing were both subdued. Indeed, the annual picture shows overall consumer credit rising by less than in either of the two previous years as consumers' preference for secured borrowing options continues to substitute for personal loans," he added.