Home repossessions fell in the second quarter of the year and cases of arrears levelled off as lenders responded to government pressure to show more forbearance to homeowners in difficulty.
Today’s figures from the Council of Mortgage Lenders (CML) show that there were 11,400 cases of repossessions — equivalent to one mortgage in 1,000 — between April and June, 10 per cent fewer than the 12,700 in the first three months of the year.
However, on a year-on-year basis, the number of repossessions rose by 14 per cent, compared with the 10,000 cases in the second quarter of 2008.
The figures show a modest deterioration in arrears during the second quarter. At the end of the first half, the number of loans in arrears by 2.5 per cent or more of the outstanding mortgage balance totalled 205,600 — 1.85 per cent of all loans. That compared with 203,900 at the end of the first quarter, and 139,700 at the end of the second quarter of 2008.
Today’s figures mean that total repossessions in the first half of 2009 stand at 24,100. The CML is expecting repossessions for the whole year to reach 65,000.
The CML recently scaled back its prediction for repossessions during the year from 75,000 to 65,000 because of a range of government initiatives to help struggling homeowners, as well as increased tolerance on the part of lenders.
The Government’s initiatives include the Mortgage Rescue Scheme, under which people can sell some or all of their interest in their home to a social landlord and rent the property back, as well as the Homeowner Mortgage Support scheme, which enables people to defer paying interest on up to 70 per cent of their mortgage for up to two years.
A pre-action protocol was also introduced in November last year, under which the courts can grant a repossession order only if all alternative measures to keep people in their homes have failed.
Jackie Bennett, the CML’s head of policy, said that with unemployment rising and the economy still weak, the outlook would “remain challenging for the rest of this year and into 2010”.
But she added: “Today’s data shows that lenders are committed to helping borrowers manage their way through temporary payment problems and get their mortgage back on track over time, avoiding possession where possible.”
She said that low interest rates were also helping borrowers to resolve their arrears, but a commitment to resolving the situation by “paying what they can, when they can” and good communication with the lender were crucial.
“Lenders can only show forbearance if borrowers show a continuing determination to address their problems and discuss them with the lender at the earliest opportunity.”
Other data from the CML shows further signs of stabilisation in the mortgage market, but transactions are still weak on an historic basis. Lending for house purchase and remortgaging both increased in June, albeit from very low levels.
On Tuesday, the CML also published figures on house purchases in June. It said that there were 45,000 house purchase loans, worth £5.9 billion, up 23 per cent on the figure for May.
However, this was less than half the average number of loans in June over the past seven years.
A total of 116,700 house purchase loans were advanced in the second quarter, a 50 per cent increase from the preceding three months but down 22 per cent from the second quarter of 2008.
Separate CML figures on the buy-to-let market showed the first signs of stabilising in the second quarter as arrears improved significantly and the decline in new lending began to slow.
Some 21,600 new buy-to-let loans were made in the second quarter, a 4 per cent decline from 22,400 in the preceding three months.
The buy-to-let market, which is heavily reliant on wholesale funding, has suffered a sharp contraction during the credit crunch. Seven consecutive quarters of decline have left buy-to-let gross lending at very low levels.
Loans totalling £1.9 billion were made in the second quarter – 5.6 per cent of total mortgage lending – compared with £8.9 billion in the second quarter of 2008. Buy-to-let now accounts for 11.5 per cent of the total value of mortgages outstanding in the UK.