At the end of the third quarter, the proportion of mortgages with arrears equivalent to 2.5% or more of the total mortgage value was 1.12%, down from 1.18% in the second quarter and 1.33% in the third quarter of last year. This is the lowest proportion since the first quarter of 2008 when it was 1.08%.
In numerical terms, this equates to 125,100 mortgages, down from 131,400 in the second quarter and 149,400 in the third quarter of 2013.
The data also shows that the proportion of all mortgaged properties taken into possession by lenders was 0.04% (5,000 properties), the lowest quarterly proportion and number since quarterly records began in 2008. It compares with 0.05% (5,400 properties) in the second quarter, and 0.06% (7,200 properties) in the third quarter of 2013.
Within the overall reported totals, both the owner occupier sector and the buy to let sector have experienced reductions in both arrears and repossessions. Out of the total 5,000 repossessions, 1,100 were on buy to let mortgages, unsurprisingly representing a slightly higher repossession rate of 0.07% in buy to let than the overall and owner occupier rate of 0.04%.
‘Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline,’ said CML director general Paul Smee.
‘Encouragingly, recent research also suggests that many households are preparing themselves for the prospect of higher interest rates, so we expect any uptick in payment difficulties to be relatively muted if and when rates do begin rising,’ he pointed out.
‘But a key activity for lenders now is considering how best to support their borrowers in planning ahead for a time when debt servicing costs are higher than they are now,’ he added.
Meanwhile, separate statistics on England and Wales from the Ministry of Justice shows that the number of mortgage possession claims in County Courts increased from 62,862 in 2002 to a peak of 142,741 in 2008. Since then it has fallen 62% to 53,659 in 2013.
The third quarter of 2014 (July to September), recorded 9,731 claims, representing the lowest quarterly figure recorded in over a decade.
The fall in the number of mortgage possession claims since 2008 coincides with lower interest rates, a proactive approach from lenders in managing consumers in financial difficulties and other interventions from the government, such as the Mortgage Rescue Scheme, which was in place from January 2009 to March 2014.
At the same time as the number of claims rose (between 2002 and 2008), the estimated proportion of claims which progressed to an order, warrant or repossession by county court bailiffs also increased.
However, the trend in more recent years has been one of decline while the estimated percentage of claims progressing to an order, warrant or repossession in 2008 was around 73%, 46% and 27% respectively; provisional estimates for the third quarter of 2014 were around 70%, 41% and 20%.
The number of landlord possession claims in County Courts fell from 194,645 in 2002 to 134,961 in 2010, but has since increased by 26% to 170,451 in 2013. This increase has been in stark contrast to the 29% decline in the number of mortgage possession claims over the same period.
The third quarter of 2014 recorded 40,859 claims, some 3,700 or 8% less claims issued than the same quarter in 2013. This is the second consecutive quarterly decline when compared to the same period the previous year, since 2010.
For landlord repossessions by county court bailiffs, there were 11,100 in July to September 2014. This is the highest quarterly figure in our series, which covers the period from 2000.
The estimated proportion of claims which have progressed to an order, warrant or repossession by county court bailiffs has also been increasing slightly since 2010. Whereas the estimated percentage of claims leading to an order, warrant or repossession in 2010 stood at around 68%, 36% and 21% respectively, the corresponding quarter three 2014 figures are 72%, 39% and 21%.
