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In Focus Consumer Credit


Mortgage possessions down again in the fourth quarter


Progress has been made across several loan types as creditors continue to work with their customers


Paul Smee


Director general, the Council of Mortgage Lenders paul.smee@cml.org.uk


The number of properties taken into possession last year declined by almost 25%, according to our data. Last year’s total of 7,700 cases of possession compared with 10,200 in 2015, and was the lowest number since 1982. Over the course of 2016, the number of mortgages in arrears fell by 7%.


Annual comparisons


However, although the data show a clear underlying downward trend in the number of possessions, some care is needed in making annual comparisons. The timing of some possessions, last year, may have been affected by a court case that caused lenders to review their processes.


The number of possession cases declined in the fourth quarter of 2016, as well as over the year as a whole. In the final three months of the year, 1,800 properties were taken into possession, down from 1,900 in the preceding quarter and 2,200 in the last quarter of 2015. At the end of last year, there were 94,100 mortgages with arrears of 2.5% or more of the outstanding balance, a slight increase on the total of 93,300 at the end of the


Number of possessions, buy-to-let and owner-occupied markets


third quarter. But that compared to a total of 101,700 at the end of 2015.


Across the market as a whole, there was significant improvement last year in the number of mortgages with more modest levels of arrears – those up to 5% of the outstanding balance.


There was an increase over 2016 in the number of mortgages with arrears of more than 10% of the balance, from 23,700 to 26,000. This figure may have been distorted by the timing of possession actions.


Buy to let


In the buy-to-let sector, the number of loans in arrears was unchanged in the fourth quarter of last year, at 5,000, but 11% lower than at the end of 2015 (5,600). The number of owner-occupier arrears edged upwards in the final quarter of last year, from 88,300 to 89,200, but was lower than the total at the end of the previous year (96,200). The number of buy-to-let properties taken into possession in the final quarter of last year was unchanged, at 600, but lower than in the last three months of 2015 (700).


Arrears on mortgages, 2.5% or more of balance outstanding


Customers do need to be ready for a time when the outlook may not be so benign


In the final quarter, a total of 1,200 owner-occupied properties were taken into possession, down from 1,300 in the preceding quarter and 1,500 in the final three months of 2015.


It is encouraging to see improvement in arrears and possessions during a year in which borrowers were clearly helped by the downward trend in mortgage rates. But customers do need to be ready for a time when the outlook may not be so benign, with pressure on real incomes increasing and as interest rates begin to move upwards again. Lenders remain committed to helping borrowers work through any period of temporary payment difficulty and remain in their home wherever possible. CCR


Arrears by bands, as a proportion of arrears 2.5% or more outstanding


Source: CML Economics March 2017


Source: CML Economics www.CCRMagazine.co.uk


Source: CML Economics 23


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