Photo: James Stringer
There were 21,000 repossessions in 2014, down 26 per cent compared to the 28,900 recorded in 2013 and the lowest number since 2006, according to the Council of Mortgage Lenders. The repossession rate was also at an eight-year low of 0.19 per cent.
There were also fewer mortgages in arrears at the end of 2014 than at any time since 2006, with 1.05 per cent of all mortgages in arrears equivalent to 2.5 per cent or more of the mortgage balance – down from 1.29 per cent at the end of 2013.
In numerical terms, this equates to 116,800 loans, down from 144,600 at the end of 2013.
The decline in both arrears and repossessions mark an increasingly positive period for personal finances, as mortgages become more affordable and unemployment continues to fall.
Looking ahead, the CML notes that interest rates will eventually rise, and that this will put increased pressure on some household finances, but lenders urge customers to plan ahead.
CML director general Paul Smee comments: “No-one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing. It’s essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise.”
For the moment, though, the latest Inflation Report confirms that the Bank of England Base Rate – which will have been at a historic low of 0.5 per cent for six years in March – is unlikely to rise in the immediate future.
“In a U-turn from previous guidance, BoE governor Mark Carney also stated this morning they would be willing to cut the Bank Rate closer towards 0 per cent if low inflation persiste,” notes Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB).
He adds, though, that repossessions “are always a last resort and lenders are obligated to help those who are struggling with their mortgage repayments as much as possible”.