The number of UK residential property repossessions in the first quarter of 2016 fell to a record low of 2,100 out of some 11.1 million mortgages that are currently in existence, data from the Council of Mortgage Lenders shows.
While that only represents a small decline from the 2,200 repossessions in the fourth quarter of 2015, it compares with 3,000 in the first quarter of 2015 and a record high of more than 13,000 repossessions in the first quarter of 2009 – the height of the credit crunch fall-out. The previous lowest number, according to CML records, was in 1982 when the number of mortgages was much lower at 6.9 million.
Paul Smee, the CML’s director general said: “Lenders continue to work very effectively to help their borrowers through periods of difficulty when they do occur, and borrowers should be reassured that most cases of arrears can be resolved and will not lead to repossession. The key to dealing with difficulty is to tackle it early, and to communicate with your lender as soon as you think you may be facing problems.”
The view that lenders are being more helpful where they can, is one that’s shared across the industry. Jonathan Harris, director of mortgage broker Anderson Harris, told the Financial Reporter "the fact that lenders are prepared to be flexible and show forbearance that is keeping repossessions at bay".
However, a record low Bank of England interest rate of 0.5% is also supporting borrowers, as it is helping keep mortgage repayment rates anchored. This view is supported by the declining number of mortgages that are falling into arrears. The CML data also reports there were just 92,100 mortgage in arrears of 2.5% or more between January and March this year, down from 101,700 at the end of December, and 111,200 at the end of the first quarter of 2015.
So, it seems that – for the moment – leniency/forbearance by lenders and low mortgage rates are helping struggling home-owners keep their property. This is good news, even more so that it is occurring during the uncertainty ahead of the EU referendum later this month. The ‘In’ camp would have us believe that this could change if the country collectively chooses to leave the EU, while the ‘Out’ camp has so far, had little to say on this specific matter.
It is worth noting, too, that while repossessions and arrears are low, the number of evictions from social housing has risen. Court data from the Ministry of Justice shows there were 42,728 rental evictions in England and Wales by county court bailiffs throughout the whole of 2015. By comparison, there were just 5,594 mortgaged property repossessions over the same period.
Could it be that more investors who rent to the social sector have been cutting their buy-to-let portfolio’s in readiness for a ‘Brexit’? With little information available on why there is such a discrepancy between the two, it might be a case of ‘watch this space’.