Repossessions fall to record low

The number of home repossessions in the UK fell to its lowest level for 20 years during 2002, figures from the Council of Mortgage Lenders (CML) showed today.

11,970 properties were repossessed by mortgage lenders last year, well down on the 68,540 repossessed during 1992, and representing just 0.11% of all loans.

The number of mortgages in arrears also reached a new low, with just 50,510 homeowners more than six months behind on payments, again significantly down on the 1992 high of 352,050. According to the CML, the figures are due in part to the fact low unemployment and the booming housing market, which has meant that many people have high levels of equity in their property, putting them in a stronger position if they are unable to work.

CML deputy director general, Peter Williams, said: "One borrower in a thousand suffered repossession last year, compared to around one in 130 at the worst point in the cycle in 1991.
This is an excellent achievement by the industry, although we would like to see even more people secure in their homeownership."

The CML accordingly announced a new target to reduce the number of homes that are repossessed. It aims to keep the average number of repossessions below 30,000 a year (the average for the past 10 years is nearly 35,000) and to keep repossessions lower than they would have been in comparable economic circumstances in the past.

The new target replaces the goal lenders set themselves in 1999 to have a 55% take-up by 2004 of mortgage payment protection insurance, which covers mortgage repayments if the policyholder cannot work due to an accident, sickness or unemployment.

However, although the CML recognised that the figures were the most positive since 1982, it added that they reflected the recent benign conditions, and not the future uncertainty about the housing market.

Steve Jones of Towry Law Mortgage Services commented: "Figures out today from the CML showing mortgage arrears to have fallen yet again are indicative of mortgage affordability in the current low interest rate climate.

"Despite the recent dip in confidence, fuelled by the slowdown in London house prices, and general economic uncertainty, these figures demonstrate that the current market still offers potential homebuyers a fantastic opportunity while interest rates remain at a 40-year low.

"However, it is imperative that borrowers think carefully about whether they can afford the repayments over the longer term. When advising our clients we carefully consider their affordability, helping to protect them against any possibility of arrears in the future."

The CML said lenders would continue to encourage borrowers to take out mortgage payment protection insurance, as well as think about how they would manage if they couldn't work.