The number of repossessions has fallen to an eight-year low, with last year seeing a fall of more than 25% in repossessions compared with 2013.
The Council of Mortgage Lenders (CML), the umbrella group that represents most of the industry, said there were 21,000 repossessions last year, with a rate of 0.19%. In other words, there were 19 repossessions for every 10,000 mortgaged properties. That is the lowest rate since 2006.
Of those homes that were repossessed, 16,100 belonged to owner-occupiers and 4,900 were buy-to-let properties.
The CML also said there were fewer home loans in arrears at the end of 2014 than at any time since 2006.
Separately, the Finance & Leasing Association (FLA) said the number of second-charge mortgage repossessions was 447 in 2014, the lowest level for several years. In the final quarter of last year, the number of second-charge repossessions was 79, down more than a third on the last three months of 2013.
Second-charge mortgages are secured loans that use a property as security. As with traditional mortgages, your home is at risk if you fail to keep up repayments.
Paul Smee, director-general of the CML, said: “The relatively low rate of repossession among owner-occupiers – around one in 600 mortgages last year – should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort.”
However, he warned: “No one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing.
“It’s essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise.”
The CML said a rise in the number of people struggling to meet their repayments was usually down to high interest rates and/or rising unemployment. The positive news on repossessions is likely to be down to these two factors being stable and falling respectively at the moment.