"These numbers do not reflect the recent interest rate hike either and with more rate rises a possibility, home repossessions may well increase further."
At 88,300, the number of loans in arrears was 2% lower than in the second quarter of the year and at its lowest level since this run of data began in 1994.
The number of properties taken into possession in the third quarter nudged upwards to 1,900, the same total as in the first three months of this year.
The second quarter total of 1,800 cases of possession had been the lowest since quarterly data began in 2008, and the proportion of properties taken into possession (at 0.02%) has remained unchanged in each period since the second quarter of 2015.
Within the total, the number of owner-occupied properties taken into possession increased in the third quarter from 1,100 to 1,300, while buy-to-let repossessions fell from 700 to 600. The last time the number of owner-occupied possessions rose was in the first quarter of 2014, when the total increased from 4,900 to 5,000.
The number of mortgages in arrears fell across all bands, apart from those owing 10% or more of the outstanding balance. The number of mortgages in this category edged up by 0.4% from 25,500 to 25,600, partially reversing a 4% fall in the number of loans in this category in the second quarter of the year.
UK Finance’s Head of Mortgages Policy, June Deasy, said: “Even a small rise in mortgage possessions is disappointing but, after a long period of declining numbers, it was inevitable that they would rise again at some stage. Both arrears and possessions remain low by historical standards and look set to be lower for the year than we predicted at the start of 2017."
Jonathan Harris, director of mortgage broker Anderson Harris, commented: "Worryingly, possessions are on the rise, albeit from an historically low level. These numbers do not reflect the recent interest rate hike either and with more rate rises a possibility, home repossessions may well increase further.
"Clearly, there is no room for complacency. Possessions have long been declining but that can change and borrowers need to be prepared. We suspect that when it comes to their finances there are many people who don’t have a buffer to tide them over should they get into difficulty."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: "These figures show on the one hand that low interest rates have helped keep arrears in check but on the other, possessions edging up is evidence of increased lender confidence in selling properties owned by those in greatest debt.
"Looking forward, upward pressure on interest rates is likely to increase arrears as borrowers ‘on the margins’ always tend to be most vulnerable."
