"The rise in the more serious arrears category perhaps suggests that we should not be entirely surprised if the number of mortgage repossessions rises a little in future reporting periods."
Figures also released today from the CML show that the overall repossession rate also remained the same in the third quarter as the second quarter, at 0.02%, representing 1,900 mortgages (of which 1,300 were owner-occupier, 600 buy-to-let).
Mortgage arrears remained at a 20-year low in Q3 remaining at the same rate as in Q2, with 0.84% of all mortgages recording arrears equivalent to more than 2.5% of the mortgage balance.
Within the total of all mortgages in arrears, the number of cases of lower level arrears continued to fall, but the heaviest band of 10% or more saw a rise.
Fiona Hoyle, Head of Consumer and Mortgage Finance at the FLA, commented: “The third quarter of 2016 saw further reductions in the number of second-charge mortgage repossessions, as lenders continued to settle into the FCA’s MCOB regime while also assisting customers with repayment difficulties.
“With just Q4 remaining, we expect the number of repossessions in 2016 as a whole to be lower than in 2015.”
CML director general Paul Smee said: “The latest arrears and repossession data still paints a reassuring picture of a market in which financial difficulties are relatively rare, and repossession rarer still. However, there is no denying that economic uncertainty for households is increasing.
“Mortgage lenders are fully committed to ensuring that any home-owner who faces temporary financial difficulty gets help, as far as reasonably possible, to resolve it and to remain in their home. This will continue, whatever the economic climate. But the rise in the more serious arrears category perhaps suggests that we should not be entirely surprised if the number of mortgage repossessions rises a little in future reporting periods."
Jonathan Harris, director of mortgage broker Anderson Harris, added: "With interest rates at rock-bottom for several years, it should follow that the number of people in arrears remains at a 20-year low. However, there was a slight rise in the more serious arrears category which could translate into an uptick in the number of repossessions going forward so there is no room for complacency.
"There are still many homeowners 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 or if they were to lose their job? 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.
"It is vital that borrowers keep their lender in the loop if they are struggling with their mortgage. Lenders are being flexible and showing forbearance but it is much easier and less stressful to come up with solutions early on than further down the line when the options may be much more limited."
