Mortgage arrears at record level but repossessions fall

A RECORD number of families are behind with mortgage payments, but fewer homes were repossessed last year.

The Council of Mortgage Lenders, which represents more than 95 per cent of lenders, reported yesterday that the rate of repossession continued to slow in the second half of last year.

Repossessions were at their peak in the second half of 1991 when 38,930 homes were repossessed, either through court orders or homeowners walking away. This fell to 35,750 in the first half of 1992 and 32,790 in the second half, a total of 68,540 for the year, compared with 75,540 for 1991.

Sheila McKechnie, director of Shelter, the housing charity, said: 'The problem of mortgage debt is not diminishing, it is just shifting from repossessions to long-term arrears. The crisis has been postponed, not solved.'

A record 352,000 households are now six months or more behind with mortgage payments. Those with arrears between six and 12 months - 205,000 - have reached a new peak, representing more than 2 per cent of home buyers, while a further 1.48 per cent of buyers are more than a year behind with payments.

Mark Boleat, director-general of the Council of Mortgage Lenders, pointed out that repossessions had been cut by about 10 per cent. But the latest 0.5 per cent cut in mortgage rates would not have any great impact on repossessions. 'Where people are losing their homes they generally have been paying nothing at all. The cut will help those who have been making reduced payments, and if it helps to get the housing market going, then it will be a benefit . . .'

Shelter fears that once the housing market picks up, lenders will be keener to press for repossession because they will find it easier to sell the property. At the end of 1992, lenders had 64,970 repossessed properties in stock, and had sold 71,000 during the year.

The mortgage lenders council says that homeowners in financial difficulties will find it easier to trade down and unravel their problems. But the Government has still not implemented the changes in mortgage interest tax relief (Miras), which would allow those who owe more than the value of their home to swap their mortgage to a cheaper home.