Repossessions and arrears in UK property market less than expected
The rate of repossession and arrears in the UK residential property market have stabilised at much lower levels than anticipated, according to the Council of Mortgage Lenders. It’s latest figures covering the first three months of 2013 shows that repossession rates remained at 0.07% for the fourth consecutive quarter, the equivalent of fewer than one in 1,400 mortgaged properties being taken into possession by lenders each quarter. Arrears also remain stable.
The number of mortgages in arrears has been similar across all categories for at least a year, and the underlying trend is unchanged. At the end of the first quarter some 159,800 mortgages had arrears equivalent to 2.5% or more of the mortgage balance. This number was equivalent to 1.4% of all mortgages, the same proportion both as last quarter, and as the same quarter last year.
Within the total number of mortgages in arrears, 82,600 mortgages had arrears equivalent to 2.5% or more but less than 5% of the mortgage balance, 32,000 had 5 to 7.5% of the balance, 14,900 were noted as 7.5 to 10% of the balance, and 30,300 were 10% or more of the balance.
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A total of 8,000 properties were taken into possession, down from 9,600 in the first quarter of 2012, but showing the usual seasonal pattern of an upturn from the fourth quarter figure of 7,700. Around 20% of repossessions were on buy to let rather than owner occupier properties. The CML’s last forecast for 2013 anticipated that there would be a total of 35,000 repossessions in 2013, with 160,000 mortgages in arrears of 2.5% or more at the end of the year. The CML has no imminent plans to revise this forecast.
‘Mortgage arrears and repossessions have stabilised at levels lower than many anticipated when the economic downturn started. Low interest rates, continuing employment, lender forbearance and tactical public policy support have combined to ensure that repossession really is a last resort,’ said CML director general Paul Smee. ‘Anyone who is worried about their mortgage can be assured that, as long as they take steps early to address them, most problems can be contained. Lenders very much want to enable people to stay in their homes wherever they have sustainable prospects of getting their mortgage back on track,’ he added.
The figures also show that gross mortgage lending of £4.2 billion across 33,500 mortgages was advanced to buy to let landlords in the first quarter of 2013, compared with £4.6 billion the previous quarter, and £3.7 billion in the first quarter of last year. Nearly half of this lending was for remortgage, rather than house purchase. Nevertheless, the buy to let sector continued to grow, and loan performance improved. By the end of March buy to let lending accounted for 13.4% of total outstanding mortgage lending in the UK, up from 13% the previous quarter and 12.9% at the end of the first quarter of 2012.
There are now around 1.46 million buy to let mortgages in the UK, accounting for around 13% of the total estimated stock of 11.26 million mortgages.