The total number of properties taken into possession by first-charge mortgage lenders in 2011 was 36,200. According to new data from the Council of Mortgage Lenders, this was the lowest annual total since 2007.
On arrears, there continued to be a modest improvement across all arrears bands in the fourth quarter, and in 2011 as a whole compared with the previous year. At the end of 2011, 159,400 mortgages had arrears equivalent to 2.5% or more of the mortgage balance, 7.5% down from 172,400 at the end of 2010.
Buy-to-let properties accounted for 5,900 of the repossessions in 2011, up from 4,700 in 2010. The overall repossession rate was 0.32% in 2011 - 0.31% on owner-occupied properties, and 0.42% on buy-to-let. This compares with an overall rate of 0.33% in 2010 - 0.32% on owner-occupied properties, and 0.36% on buy-to-let.
The higher repossession rate on buy-to-let is not reflected in the arrears experience, however, with the buy-to-let sector experiencing a lower level of arrears than the owner-occupier sector.
While the 3 months arrears rate stood at 1.98% of all mortgages at the end of 2011, the proportion was higher among owner-occupiers (2.06%) than among buy-to-let mortgage holders (1.38% if receiver of rent cases were excluded; 1.79% if included).
Although arrears and repossessions throughout 2011 were fairly stable, the CML has no current plans to revise its current 2012 forecasts for the year. Worsening unemployment and continuing pressures on the cost of living seem likely to result in some further deterioration in the position of households in 2012.
The CML anticipates that this is likely to result in around 45,000 repossessions and around 180,000 mortgages in arrears of 2.5% or more by the end of the year.
CML director general Paul Smee said:
"Low interest rates and good arrears management by lenders are helping the vast majority of those borrowers who face difficulties to keep their homes and get back on track.
"This will continue, but in the face of wider economic difficulties and rising unemployment, we are concerned that there will be a higher number of people facing more serious problems in 2012.
"Anyone worried about their finances should talk to their mortgage lender and take advice on their other debts as soon as possible. This will give them the best possible chance of staying in their home even if they have a spell of financial difficulty.
"Forbearance cannot be indefinite; but for most households arrears are temporary and can be resolved."
Mark Blackwell, managing director of xit2, the mortgage and property data exchange specialist, said:
“The headline figure may be positive, but it masks serious underlying problems in borrower finances. Repossessions are only being kept low by lenders’ generous forbearance policies, which they can’t afford to sustain in the long term.
"These policies are a life support machine for many borrowers whose finances are in a torrid state. Lenders will be forced to switch a number of these life support machines off as they try to protect there balance sheets, and we are sure to see repossessions soar.
"There is a block of 30,000 borrowers in serious long term arrears – it will only take a small downturn in the economy, or a gentle rise in the base rate, to push them over the edge and into repossession.”
