Home repossessions creep up, mortgage lenders say

Mortgage application form A fall in arrears of mortgage payments came despite a squeeze on household budgets

A total of 9,200 homes in the UK were repossessed in the third quarter of the year, a slight rise on the previous three months, lenders have said.

There were 100 more homes repossessed than during the last quarter, and the same rise compared with the third quarter of 2010.

However, the Council of Mortgage Lenders (CML) said that there was a slight fall in the number of people falling behind with mortgage payments.

Low interest rates have helped owners.

"The fall in the number of mortgages in arrears, and the stable picture on repossessions, are testament not only to the beneficial effects of low interest rates, but also to effective arrears management, and good communication between lenders, borrowers and debt counselling organisations," said CML director general Paul Smee.

"Against the backdrop of widespread financial uncertainty sweeping both the UK and the wider European economies, it is impossible to be sanguine about the future influences that households may face.

"But lenders will do their utmost to help borrowers keep their homes, whatever pressures emerge."

Squeeze

The extent to which homeowners have managed to stave off problems in keeping up with mortgage payments has defied even the lenders' predictions.

Houses under black sky The picture could become bleaker as finances become more stretched, lenders say

So far this year, a total of 27,500 properties have been repossessed, 4% fewer than the same period last year.

The CML said it now expected the total for the whole of 2011 to be lower than its forecast of 40,000.

Despite the squeeze on household finances, record low interest rates have meant that the mortgage bill for many families has been relatively low.

As a result, the number of mortgage payments in arrears fell slightly compared with a year ago, the CML said.

At the end of September, the total number of mortgages with arrears of 2.5% or more of the outstanding balance stood at 161,600, or 1.44% of all home loans.

Start Quote

With tenant demand remaining strong in the rental sector, some existing buy-to-let landlords have been expanding their portfolios”

End Quote Paul Smee Council of Mortgage Lenders

This total was 2% lower than the number recorded three months ago, and 8% lower than at the end of September 2010.

But the CML warned that falling real incomes, rising cost of living, and more unemployment could push up the number of people facing mortgage arrears in the coming months.

Property investing

Separate figures published by the CML show that there was a 16% rise in the number of new buy-to-let loans advanced to landlords to 34,500 in the third quarter compared with the previous three months.

The number and value of these loans were at their highest level since the final three months of 2008.

The move comes as the cost of renting has increased to record levels, according to some surveys, owing in part to frustrated first-time buyers continuing to rent.

"With tenant demand remaining strong in the rental sector, some existing buy-to-let landlords have been expanding their portfolios and the growth that returned to the sector in the preceding quarter has continued," Mr Smee said.

"The recovery of buy-to-let from its low point in 2009 has helped improve supply and choice in the rental market."

However, he added that the amount of buy-to-let lending remained at just a third of the peak in the market.

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