CML: Repossessions and debt data

The Council of Mortgage Lenders welcomes the increased resources announced by the Government today to strengthen and underpin the advice available to borrowers facing repayment difficulties through Citizens Advice Bureaux and other providers.

The CML and lenders are already committed to using repossession only as a last resort. And the industry is working to make further improvements to ensure that borrowers affected by the side effects of the credit crunch, as well as those affected by changes to their income, get early information and fair treatment to help them plan ahead and manage periods of difficulty.

It is important to keep the situation in perspective. The data published today by the Ministry of Justice on court orders for repossession show that the number of possession orders in the first quarter of this year were 9% higher than in the fourth quarter of 2007 and 17% higher than in the first quarter of 2007. These rises, while not welcome, are unsurprising and in line with the CML's expectations. Out of 11.8 million mortgages, the CML forecasts 45,000 repossessions this year, equating to only around 1 in 300 mortgages. This is less than half the rate experienced in the early 1990s.

Michael Coogan, CML director general, commented: "No-one wants to see repossessions rise. But risk is a part of life, and for some households circumstances change and they cannot get back on their feet. However, most people who suffer payment difficulties can get out of trouble by taking good advice, prioritising their debts, and communicating with their lender early.

"Lenders are committed to keeping the number of repossessions as low as possible, even in more challenging economic conditions. Encouraging borrowers to take action early, by seeking advice, can make a big difference. Lenders are working hard to ensure that they contact borrowers who may be at risk of seeing their payments go up, to enable them to plan ahead.

"We welcome the Government's increased support for home-owners in these more challenging times. We hope that the potential reform of Income Support for Mortgage Interest, part of today's Government package, results in meaningful changes to improve the safety net, and we look forward to hearing more details."