Home repossessions fall to record low
If this rate continues through 2016, the annual number of repossessions will be lower than any year since 1982, says CML.
What’s the latest?
The number of people losing their homes has fallen to its lowest level since records began.
Lenders repossessed only 2,100 properties due to homeowners falling behind with their mortgage during the first three months of the year, according to the Council of Mortgage Lenders (CML).
There was also a drop in homeowners classed as being significantly behind with mortgage repayments, with numbers falling below the 100,000 mark for the first time in more than a decade.
Why is this happening?
Record low interest rates are helping to keep mortgage repayments affordable, even for those who get into financial difficulties.
Lenders are also working with borrowers who fall behind with their mortgage to find a solution, and are only repossessing their homes as a last resort.
At the same time, the improving economy, with rising wages and employment levels, means fewer people are getting into difficulties in the first place.
Who does it affect?
It is great news that fewer homeowners are facing problems paying their mortgages.
Not only does this mean fewer people are losing their homes, but it is also good for the housing market, as property values tend to fall during periods when there are a lot of forced sales.
The low level of arrears is good news for tenants too, who often get evicted if their landlord falls behind with their mortgage.
The CML figures show that only 600 of the properties repossessed in the first quarter were buy-to-let ones.
Sounds interesting. What’s the background?
The CML said if the current rate at which properties are being repossessed continues for the rest of the year, only around 8,400 people would lose their homes.
And that would be the lowest rate for a full year since 1982, when there were only 6.9 million mortgages, compared with 11.1 million today.
But there are concerns about how well homeowners will cope once interest rates start to increase again, particularly as some homeowners have never experienced a rising rate cycle.
A 0.5% increase to the bank rate would add around £66 a month to a £250,000 mortgage.
Paul Smee, director general of the CML, said: “The key to dealing with difficulty is to tackle it early, and to communicate with your lender as soon as you think you may be facing problems.”
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