Despite media headlines trumpeting the number of repossessions in the UK, the latest data from the Council of Mortgage Lenders (CML) show no surprises in terms of the number of mortgage arrears and possessions cases in the first half of 2008.
While both have increased from their low base as expected, the overwhelming majority of the UK's borrowers continue to pay their mortgages in full every month, and will continue to do so said the organisation.
The CML is maintaining its forecast of 45,000 total possessions and 170,000 mortgages in arrears of more than three months by the end of the year. These numbers, it says, remain extremely small when seen in the context of the 11.74 million mortgages in the UK.
The CML numbers relate only to first mortgages, not to other consumer loans secured on people's homes.
The possession rate - that is, the proportion of all mortgages on which possession occurred in the period - was 0.16 percent in the first half of the year, up from 0.11 percent in both the first and second halves of 2007.
The possession rate now is similar to that of the late 1990s, but remains less than half the rate experienced in the early 1990s.
By number, there were 18,900 cases where lenders took possession of property in the first half of the year. This compares with 13,400 in the second half of 2007, and 12,800 in the first half of 2007.
On arrears, the total number of households with arrears of three months or more was 155,600 at the end of the first half of the year, up from 129,600 at the end of 2007 and 120,800 at the end of the first half of last year. The arrears rate stood at 1.33 percent of all mortgages, up from 1.10 percent at the end of 2007 and 1.02 percent at the end of the first half of last year.
The CML does not collect disaggregated data by region, property type, borrower characteristics, or loan characteristics. But it is possible to observe in general terms that, while arrears and possessions rates have risen across the industry, the impact of the credit crunch has hit the adverse credit sector harder than most of the mainstream market, which continues to perform well.
The CML has been working extensively with the government, consumer groups, the FSA and the courts to ensure that as much as possible is done to help borrowers who may be facing financial problems, and to manage arrears effectively in business terms.
The CML has published a leaflet for MPs designed to help them to advise any constituents who may approach them for help as a result of mortgage payment difficulties.
Commenting on the current situation, CML director general Michael Coogan observed: The number of people facing difficulty needs to be kept in perspective.
The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals.
“But it is inevitable that more borrowers' coping strategies will come under pressure in current conditions than in the unusually benign years of the last decade.
“No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender. Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options - the earlier the better.”
