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).
Chart 1: Repossessions, buy-to-let and owner-occupied markets
Although the arrears rate was static, the number of mortgages in arrears rose slightly in the third quarter of 2016 to 93,300, up from 92,500 in the previous quarter, in line with a rise in the estimated total number of outstanding mortgages (up from 11,058,000 to 11,108,000) driven mostly by a rise in the number of outstanding buy-to-let mortgages but also a modest rise in home-owner mortgages.
Within the total of all mortgages in arrears, there was also a shift in the distribution of cases, with the number of cases of lower level arrears continuing to fall, but the heaviest band of 10% or more rising. It is likely that this reflects continuing distortions in the timing of instigating possession actions in the wake of court and regulatory activity
Chart 2: Arrears on mortgages 2.5% or more of balance outstanding
As a result, the decline in the arrears rate among home-owners in the 2.5-5% band from 0.43% to 0.42% (39,600 cases to 39,000 cases) was offset by the rise in the >10% band from 0.25% to 0.26% (22,800 cases to 24,000 cases).
Chart 3: Arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding
Commenting on the new data, 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. We would strongly urge all mortgage holders to consider whether there are ways that they can plan ahead for possible changes in the future – whether this relates to employment prospects, mortgage payments, or other spending.
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.