Mortgage arrears down in first quarter of 2014

Both the number and the proportion of mortgages in arrears fell during the first quarter of 2014, according to new figures from the Council of Mortgage Lenders.

At 138,200 and 1.24%, both the number and proportion of mortgages with arrears of more than 2.5% of the mortgage balance were at their lowest level since the second quarter of 2008. These numbers compare with 144,600 and 1.29% at the end of the fourth quarter of 2013; 159,700 and 1.42% at the end of the first quarter of 2013. The number of mortgages in arrears fell in all arrears bands, including the most serious band - at the end of the first quarter, 1 in 400 mortgages had arrears equivalent to 10% or more of the mortgage balance.

Repossessions showed their usual seasonal pattern in the first quarter - rising a little to 6,400, up from 6,100 in the fourth quarter of 2013, but 20% down on the 8,000 repossessions in the first quarter of 2013.
 
These figures include both owner-occupier mortgages and buy-to-let mortgages. While direct comparisons are made more complicated by the fact that, in the buy-to-let sector, a "receiver of rent" may sometimes be appointed if the borrower defaults, the arrears rate is higher in the owner-occupier sector. Around 1.7% of home-owner mortgages had arrears equivalent to at least three months' mortgage payments while the proportion was around 0.9% among buy-to-let mortgages.

Commenting on the latest arrears and repossessions numbers, CML director general Paul Smee said: "The downward trend in the number of mortgages in arrears or ending in repossession is obviously very welcome. Repossession is absolutely the last resort - the aim is to keep people in their home and get their finances back on track wherever possible.
 
"Lenders fully recognise that behind the numbers, these are real households, with differing circumstances. Lenders try to ensure that all borrowers are treated fairly and sensitively. They continue to improve their practices to try to achieve the best outcomes when payment problems do occur. Combined with low interest rates and an improving jobs market, these strategies are clearly helping many households."