Lenders have scaled back their forecast for home repossessions this year after figures for the latest quarter rose by less than expected.
The number of properties taken into possession by mortgage lenders in the third quarter of 2011 was 9,200, virtually unchanged from 9,100 in the second quarter, the Council of Mortgage Lenders (CML) said today.
So far this year, 27,500 properties in total have been taken into possession - 4% fewer than in the equivalent period last year.
The CML said: "It now appears likely that the total number of repossessions in 2011 will be lower than the CML's forecast of 40,000."
It has not given a figure for its new estimate but said that its previous prediction had been based on interest rates going up, whereas the Bank of England has kept the base rate at a historic 0.5% low.
Last year 36,300 people lost their homes as household incomes were squeezed following rising living costs and slow wage growth.
The latest figures showed a slight fall in the number of households in mortgage arrears.
At the end of September, the total number of mortgages with arrears of 2.5% or more of the outstanding balance fell to 161,600, down from 165,200 in the previous quarter.
The CML said that 27,300 loans had "significant" arrears of more than 10% of the outstanding balance, also down from 27,600 the previous quarter.
But the CML, which represents banks, building societies and other lenders, predicted the improving recent trend would face a "significant challenge" in coming quarters due to falling real incomes and rising living costs.
The body said a willingness by lenders to help those in difficulty had "clearly been successful to date" in keeping the vast majority of households facing difficulty in their homes.
The CML's director general Paul Smee said: "The fall in the number of mortgages in arrears, and the stable picture on repossessions, are testament not only to the beneficial effects of low interest rates, but also to effective arrears management, and good communication between lenders, borrowers and debt counselling organisations.
"Against the backdrop of widespread financial uncertainty sweeping both the UK and the wider European economies, it is impossible to be sanguine about the future influences that households may face.
"But lenders will do their utmost to help borrowers keep their homes, whatever pressures emerge.
"Anyone worried about their mortgage should seek early advice and talk to their lender - these figures firmly show that repossession does not have to be an inevitable consequence of mortgage arrears."
Howard Archer, chief UK and European economist at IHS Global Insight said the latest figures were "substantially less than feared" and indicated that lenders were being more sympathetic.
But he warned: "There is a very real danger that home repossessions will spike up over the coming months.
"With unemployment now moving markedly back up as the economy struggles to avoid renewed recession and public sector jobs are culled, and with heightened pressure on people's finances coming from elevated inflation, low wage growth and the fiscal squeeze, personal finances seem destined to remain under sustained pressure.
"One piece of good news for home owners is that the Bank of England now seems unlikely to raise interest rates until well into 2013.
"This is significant as even a small rise in mortgage interest rates could well send a significant number of financially stretched home owners over the edge."
The CML said it was too early to be able to predict whether or not total repossession figures for this year will come in lower than last year.
A spokeswoman said: "At the start of 2011 the consensus was that interest rates would rise in 2011.
"This has not happened and, while lenders have always applied forbearance, their current approach, along with the range of coping strategies households have adopted to stay in their homes, has led to the number of repossessions being lower than we had originally forecast."