Repossessions fall but relief won't last

The number of home repossessions in Britain fell by 7 per cent in the first half of this year compared with the same period in 2010, new figures have revealed - but experts have given warning that the figure will rise in the coming months.

The latest quarterly data from the Council of Mortgage Lenders (CML) showed that 9,000 repossessions took place in the second quarter of the year, slightly lower than the total of 9,100 in the first quarter, bringing the total for the six-month period to 18,100. This compares with 19,500 in the first six months of 2010.

But economists said that the unsettled conditions could result in an increase in the second half of the year - pushing the total for 2011 higher than the previous 12 months. In Scotland the picture is likely to be even more gloomy, as thousands of cases put on hold in the first half of the year pending a legal ruling over repossession proceedings will go before the courts over the coming months.

"Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates," said Paul Smee, CML director general. "It is clear from the low rate of repossession that lenders do want to keep people in their homes, and are successfully doing so in the vast majority of arrears cases. Repossession really is seen as a last resort."

The total number of mortgages in arrears was also broadly unchanged in the second quarter of the year. However, there was a slight increase in the number of mortgages with low levels of arrears, and a reduction in the number in deeper arrears. People who had fallen behind with payments worth more than 2.5 per cent of their total mortgage owed fell from 166,700 to 164,500, while the number of mortgages in arrears of between 1.5 per cent and 2.5 per cent of the outstanding balance edged up from 77,800 to 78,500.

The CML said the latest figures did not affect its current forecast for a repossession rate of 0.35 per cent this year - equating to around 40,000 cases. It expects there to be slightly more repossessions next year at a rate of 0.4 per cent - or 45,000 homes.

Laura Butcher, from the Royal Institution of Chartered Surveyors in Scotland, said: "The current flat housing market in Scotland could prove a problem for some home owners needing to sell their property to avoid repossession, especially at the lower end of the market due to a lack of first time buyers."

Separate figures released by the CML showed that the value of new buy-to-let loans increased by 21 per cent in the second quarter of 2011 to the highest number and value since the last quarter of 2008. There were 32,000 buy-to-let loans, worth 3.5 billion, taken out from April to June, driven mainly by remortgaging.