Home repossessions 'lowest since 1982'

Houses Image copyright PA

Fewer homes were repossessed last year than in any year since 1982 - but lenders are warning that mortgage rates will not always be so favourable.

A total of 7,700 UK homes were repossessed last year compared with 10,200 in 2015, figures from the Council of Mortgage Lenders (CML) show.

Homes are seized in this way if borrowers are consistently unable to meet their mortgage repayments.

The CML said that falling mortgage interest rates had eased the burden.

"Customers do need to be ready for a time when the outlook may not be so benign, with pressure on real incomes increasing and as interest rates begin to move upwards again," said CML director general Paul Smee, forecasting a rise in repossessions in 2017.

The figures reveal that the proportion of buy-to-let properties that are being repossessed has risen significantly.

At the recent peak of home seizures in 2009, about a tenth of the homes repossessed were in the buy-to-let sector. Although the total number of home repossessed from landlords has fallen, this now represents a third of the total.

The number of homes repossessed overall fell in the final three months of the year, down from 1,900 in the third quarter of the year to 1,800 in the fourth quarter.

Mortgage-holders falling into arrears on their home loans also fell compared with the previous year.

The were 94,100 mortgages with arrears of 2.5% or more of the outstanding balance by the end of 2016, the CML said, compared with 101,700 at the end of 2015.

This was slightly up on the 93,300 mortgages in this position by the end of September.

Analysis: Simon Gompertz, personal finance correspondent

Ever since the number of repossessions reached nearly 50,000 in 2009, at a time of deep recession and economic hardship, banks and building societies have been under intense pressure to show more forbearance to families facing financial crisis.

Regulators told them to look for warning signs that people were in difficulty and, where they could, to take action to help by reducing monthly payments or allowing complete payment holidays or letting borrows pay off their loans over a longer period.

The flexibility has had a clear effect at a time when mortgages have in any case become much cheaper, because of sharp reductions in interest rates.

However, the Council of Mortgage Lenders warns today that repossessions are likely to rise from here, probably back up to around 10,000 this year.

It says household budgets could come under strain as a result of rising prices in the shops.

'Seek help'

Lenders and the courts have been far less speedy in seeking repossessions in recent years owing to pressure from the government, and the low levels of interest rates.

However, the CML said people fearing financial difficulty should not bury their heads in the sand.

"Borrowers who fear they may miss a payment should speak to their lender. Lenders remain committed to helping borrowers work through any period of temporary payment difficulty and remain in their home wherever possible," Mr Smee said.

Jonathan Harris, director of mortgage broker Anderson Harris, said: "We suspect that when it comes to their finances there are many people teetering on a knife edge and rate rises could easily push them over.

"While it looks unlikely that interest rates will rise anytime soon, borrowers still need to plan ahead and consider how they would cope with higher mortgage rates."

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