The rate of repossessions in the first quarter of 2016 fell to the lowest on record, according to the Council of Mortgage Lenders (CML).

There were 2,100 repossessions in the first quarter of the year, 1,500 homeowner and 600 buy-to-let, according to the CML.

If that rate continues throughout the year, the total number of repossessions would be 8,400 – lower than any year since 1982, although there are 11.1m mortgages today compared to 6.9m then.

The key to dealing with difficulty is to tackle it early

Paul Smee, director general, CML
An atom of type quote lives here

The CML, whose members undertake around 95% of all residential mortgage lending in the UK, said mortgage arrears also continued to fall in the first quarter of 2016.

For the first time in more than a decade, the number of mortgages in arrears of 2.5% or more fell below the 100,000 mark, with 96,200 loans in arrears at the end of March, compared to 111,200 at the end of the first quarter of 2015.

Even the number of mortgages in the most serious arrears band of 10% or more fell a little this quarter, the CML said.

The CML said the decline in arrears and repossessions means the experience is more positive than in the rented sector, where data from the Ministry of Justice suggests that eviction rates are much higher.

For example, there were 42,728 rental evictions in England and Wales by county court bailiffs in 2015, compared to 5,594 mortgaged property repossessions by county court bailiffs, even though the rented sector accounts for only around a third of the housing stock.

The CML said arrears rates are higher among homeowners than buy-to-let landlords, but the repossession rate is lower.

It put this down to lenders helping homeowners get over short-term tough periods to avoid repossession, while potentially moving to protect their position more quickly with buy-to-let properties.

People should talk to their mortgage lender as soon as they hit problems, the CML says. Image by Monkey Business Images/Shutterstock.com

CML director general Paul Smee said: “We cannot completely avoid the risk of any individual household experiencing arrears or repossession.

“But 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.” 

In its own annual forecast, mortgage service company HML predicted that the number of repossessions would stay low if interest rate rises are further postponed.

But the threat to the UK steel industry could mean more repossessions in South Wales and other regions where jobs are at risk, it warned.

The company said it expects a total of 10,326 repossessions across the UK during 2016, representing 0.09% of mortgages.

It expects Northern Ireland to have the highest repossession rate (0.27%), with the South West and East Midlands having the lowest (0.06%).

CEO Andrew Jones said: “Repossession is an extremely difficult time for any household, and HML works with mortgage providers to identify those at risk and provide support during times of financial difficulty.

“Another year of low repossession rates is welcome – but we shouldn’t ignore the prospect of big increases when interest rates eventually rise.

“Those hit hardest by other financial pressures such as unemployment are at particular risk, and if the UK steel industry deteriorates, we can sadly expect repossessions to increase in communities that are affected.”