Home repossessions at record low levels

Home repossessions were at their lowest levels on record in the first three months of 2016, according to the Council of Mortgage Lenders (CML).

A total of 2,100 homes were repossessed in the first quarter of 2016 across the UK, falling back from 2,200 during the previous quarter. The latest quarterly total is made up of 1,500 owner-occupied homes and 600 buy-to-let properties.

If repossessions continue at their current levels, the annual total for 2016 will be around 8,400, which would be the lowest annual total since 1982, when there were only 6.9 million mortgages, compared with 11.1 million mortgages today.

The number of home owners in arrears with their mortgages is also falling, as low interest rates continue to keep the cost of borrowing relatively cheap.

For the first time in more than a decade, the number of mortgages in arrears of 2.5% or more of the balance fell below 100,000. Some 96,200 home loans were in arrears at the end of March, down from 101,700 at the end of December. A year ago, 111,200 mortgages were in arrears.

The number of mortgages in the most serious arrears band of 10% or more has also remained "fairly static", the CML said.

CML director general Paul Smee said: "Lenders continue to work very effectively to help their borrowers through periods of difficulty when they do occur, and borrowers should be reassured that most cases of arrears can be resolved and will not lead to repossession.

"The key to dealing with difficulty is to tackle it early, and to communicate with your lender as soon as you think you may be facing problems."

Jonathan Harris, director of mortgage broker Anderson Harris, said that while falling arrears and repossession figures are welcome, home owners should not be complacent.

He said: "There are still many home owners being repossessed or finding themselves in arrears on their mortgage each year, which begs the question: what will happen when interest rates start to rise? How will people cope? 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 highly unlikely that interest rates will rise any time soon, borrowers still need to plan ahead and consider how they would cope with higher mortgage rates."

Mr Harris said borrowers who are concerned about how they might cope when interest rates eventually start to increase could consider locking into a fixed-rate mortgage deal.