Fewer people see homes repossessed

The number of people who lost their homes fell by 9 per cent during the second quarter of the year, figures showed today.

A total of 13,610 properties were repossessed during the three months to the end of June, nearly 1,300 fewer than during the previous quarter but still 23 per cent higher than for the same period of 2008, according to the Financial Services Authority.

The group said the sharply rising trend in repossessions that had been evident up to the third quarter of last year had stabilised during the past nine months.

The FSA said the fall in repossessions was likely to be due to the introduction of the pre-action protocol in November last year, under which courts can only grant a repossession order if all other measures to keep someone in their home have failed.

The Government has also launched a raft of initiatives to help people who are struggling with their mortgage, while lenders are showing greater forbearance and low interest rates are helping to keep repayments more affordable.

The regulator also reported a fall in the number of people falling behind with their mortgage payments, with 51,000 homeowners getting into arrears of 1.5 per cent or more of their outstanding mortgage during the second quarter, 14 per cent fewer than in the previous three months.

But borrowers who do get into arrears are struggling to clear their debt, with a total 403,000 people owing arrears to their lender, 30 per cent more than a year ago and a figure that has been steadily rising since early 2007.

However, the number of repossessed properties that lenders are able to sell more than doubled during the three months, compared with the same period of 2008, rising to 15,804, up from 6,987, most likely on the back of the improving housing market.

Today's figures are broadly in line with ones published by the Council of Mortgage Lenders for the same period, which showed a 10 per cent fall in repossessions to 11,400, although it reported a modest increase in the number of people who were in arrears.

The difference in the figures is due to the fact that the FSA data includes all lenders, including those offering second charge mortgages, while the CML only publishes figures on first charge loans advanced by its members.

The FSA's figures also highlighted continuing problems in the mortgage market.

Net advances, which strip out redemptions and repayments, totalled just over £5bn during the quarter, around £3bn higher than during the previous three months, but still 75 per cent lower than the same period of 2008.

The low level of new lending, combined with higher repayments due to low interest rates, meant the total value of outstanding mortgage debt edged ahead by 1 per cent year-on-year to £1.2trn.

There continued to be a fall in the amount of lending done to people borrowing more than 90 per cent of their home's value, with this dropping from a peak of 15 per cent of advances in early 2007, before the credit crunch struck, to less than 3 per cent during the second quarter.

Less than 2 per cent of mortgages were advanced to people borrowing both more than 90 per cent of their home's value and a high income multiple.

The market for mortgages for people with impaired credit histories also continued to contract during the period, accounting for only 0.4 per cent of all lending, down from 3.5 per cent during the first nine months of 2007.

Responding to the FSA's figures, Housing Minister John Healey said: "The comprehensive range of support the Government has put in place at every stage of the process has helped over 300,000 families.

"We also continue to work with lenders to ensure they show greater tolerance and understanding to those in mortgage arrears so that repossession remains the last resort."