David Prosser: An end in sight to the misery of repossession

Outlook During a recession, more people have their homes repossessed, right? Well, not this time, seemingly. The Financial Services Authority said yesterday that the number of repossessions fell 9 per cent during the second quarter.

Part of the explanation may lie in new rules introduced last November, which require lenders to exhaust all other repayment solutions before moving to repossess a defaulting borrower's home. The reform may have postponed – but only for a period – a certain number of actions.

Still, the FSA said that the number of new arrears cases was also falling – down 14 per cent in the second quarter, following a reduction in the first quarter too. In other words, while the total number of people falling behind on their mortgages is continuing to increase, it is doing so more slowly.

It's reasonable to expect higher-than-normal numbers of people losing their homes for as long as unemployment continues to rise, though the Building Societies Association points out that only 3 per cent of arrears cases proceed to repossession. Still, one rare bit of good news about this recession is that it does not seem to be producing the sort of massive increase in repossessions that we saw in the early Nineties.

The chief reason for that is the remarkably low cost of borrowing, which has made it easier to stay on top of a mortgage, even on a dwindling income. A less aggressive approach from lenders – particularly from the largest mortgage providers – has also helped. One thing that hasn't, however, is the Government's laughable mortgage assistance scheme – the recipients of its generosity can still be counted on the fingers of one hand.