Homeowners in arrears decline

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The number of homeowners in arrears or facing repossession fell significantly in 1995 in the wake of mortgage rate cuts and a drop in unemployment rates, a building society claimed yesterday, writes Nic Cicutti.

Birmingham Midshires, a top-10 society, said its own calculations suggested repossessions would remain stable at about 50,000 in December 1995, compared with the same time a year earlier.

The number of people in arrears for 12 months, usually regarded as those most vulnerable to repossession orders from lenders, will have fallen from 117,000 a year ago to fewer than 90,000 last month.

Those in arrears on their mortgages between six and 12 months are also expected to decline, from 133,700 to around 108,000.

The society's arrears and repossessions estimates, issued each year, come days before official statistics from the Council of Mortgage Lenders, the industry's trade body.

A Midshires spokesman said yesterday: "The drop in unemployment over the past year has helped. Cuts in interest rates have also made it easier for people paying off their debts.

"Many people are also saying the most important thing is their home and if the difference means giving up a holiday abroad to pay off their debts, that's what they do."

Woolwich, Halifax and Alliance & Leicester building societies confirmed yesterday that there had been a slight improvement in arrears problems with repossession numbers remaining broadly stable.

The arrears prediction came as Britain's big banks recorded a dismal month for home loans, with net mortgage lending down from pounds 686m in November to pounds 554m last month. New approvals were down 34 per cent on the previous month, from 29,291 to 19,241 in December.

The drop in net lending is even more significant when compared with December last year, when it stood at pounds 647m.

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