Within the total stock of arrears cases, all arrears bands except the most serious showed a fall. However, the stock of cases with arrears of over 10% of the mortgage balance rose to 26,500. Although this is a small number within the total mortgage market, it does suggest that there is a minority cohort of borrowers for whom arrears are worsening.
Chart 1: Arrears on mortgages, 2.5% or more of balance outstanding
Source: CML Economics
The number of properties taken into possession was also 10% down on a year ago (though up on the fourth quarter, reflecting a usual seasonal pattern). In total, 1,900 properties were taken into possession – the eighth successive quarter of a repossession rate of 0.02%.
Chart 2: Number of possessions, buy-to-let and owner-occupied markets
Source: CML Economics
In line with the normal trend of recent times, the buy-to-let arrears rate was lower than the owner-occupier arrears rate, but the repossession rate was higher. This is because of the high level of forbearance that lenders typically seek to extend to home-owners to try to enable them to resolve their difficulties and keep their homes wherever possible.
Chart 3: Arrears by bands as a proportion of total balance outstanding
Source: CML Economics
Paul Smee, CML director general said “This positive picture of mortgage performance is good news, and reflects a continuing benign interest rate and employment environment. However, it is important that borrowers continue to think about the future, and how they would cope with less positive conditions, even if that scenario seems distant.
Lenders will always work with borrowers to try to help them through the inevitable periods of difficulty that life may throw at them, such as periods of unemployment, illness or relationship breakdown. So anyone facing difficulty should not hesitate to make contact with their lender, who will wish to help them resolve their difficulties and remain in their home wherever possible.”