Home repossessions fall again but concerns remain

Home repossessions fell for the fifth consecutive quarter at the end of 2010, figures from the Council of Mortgage Lenders (CML) revealed.

They also showed that repossessions for 2010 as a whole were down 24 per cent. The total number of homes repossessed stood at 36,300, accounting for just 0.3 per cent of all mortgages. Arrears of 2.5 per cent or more of the outstanding balance fell by 13 per cent on the previous year-end, standing at 169,600.

The figures will continue the intense debate over the way mortgages are regulated. The CML argues that plans by the Financial Services Authority to significantly toughen up rules go too far and will deal a serious blow to the housing market.

Yesterday director general Michael Coogan said: "Lenders are continuing to work hard to help their borrowers who face temporary financial difficulties. As the numbers clearly demonstrate, repossession is a last resort. Most people's payment difficulties can be managed and controlled for a period until circumstances improve."

However, he also warned that the number of people facing payment pressure could increase this year if interest rates start to rise: "As we go through 2011, the number of people facing payment pressures may increase if interest rates rise, and as a result of the spending cuts that have resulted in reductions in the level of public support available. We will be monitoring developments closely, but at present we continue to expect the number of arrears and repossessions to be in line with our forecasts of 40,000 repossessions and 180,000 arrears cases as at the end of 2011."

Howard Archer, chief economist of IHS Global Insight, said: "Home repossessions have thankfully been substantially less than feared, which is very good news. Low mortgage interest payments are obviously helping many people, while unemployment has fallen back from its peak levels." However, Mr Archer also warned that any rise in interest rates could "push people over the edge".

Figures from the Ministry of Justice showed that the number of mortgage possession claims issued in the courts edged up by 1.0 per cent quarter-on-quarter to 19,329 in the fourth quarter of 2010. This was a second successive quarter-on-quarter rise, but less than the 4.4 per cent rise seen in the third quarter. Claims issued were still down by 1.7 per cent year-on-year in the fourth quarter.