Low rates help cut number of repossessions

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Record low interest rates have helped drive down the number of repossessions in the UK to the lowest level since 2007, lenders said.

Around 8,500 properties were repossessed in the fourth quarter of the year, 9 per cent down from the previous quarter, the Council of Mortgage Lenders (CML) said.

This brought the total for 2011 to 36,200, following previous predictions from the CML, which it later scaled back, that the figure would be around 40,000. There were 36,300 repossessions in 2010.

But the CML warned that forbearance cannot be indefinite and many people will face tougher problems this year.

CML director general Paul Smee said: “Low interest rates and good arrears management by lenders are helping the vast majority of those borrowers who face difficulties to keep their homes and get back on track.

“This will continue, but in the face of wider economic difficulties and rising unemployment, we are concerned that there will be a higher number of people facing more serious problems in 2012.”

The CML warned that worsening unemployment and continued pressures on the cost of living are likely to push up repossessions to 45,000 by the end of this year, with around 180,000 mortgages in arrears of 2.5 per cent of the mortgage balance.