The number of mortgages in arrears has increased 15% since June 2004, latest figures from the Council of Mortgage Lenders (CML) reveal.
The latest figures show the number of mortgages in arrears of between three to six months was 57,220, up from 53,960 in the second half of 2004 and 49,720 in the first half of the year, representing an increase of just over 15%. Mortgage arrears of between six and twelve months were also up, standing at 30,980 compared with 26,920 in December 2004 and 26,980 six months earlier.
Meanwhile the number of houses repossessed rose from 3070 in the second half of 2004 to 4640 in the first six months to June 2005 but, the CML says, they remain at historically low levels adding the figures are similar to repossession levels seen during the first half of 2002 and 2003 and still account for less than 1% of all mortgages in circulation. Put another way the number of repossessions is currently one in every 2500 compared to one in every 250 when the number of repossessions peaked in the latter half 1991.
The CML also tried to put a positive spin on the mortgage arrears figures arguing the number in mortgage in arrears between three and six months still amounted to no more than 0.5% of all mortgages, while the number of arrears over six months amounted to 0.27% of the market.
The latest report suggests arrears and repossession will continue to increase but claims absolute numbers are destined to remain small predicting the number of repossessions will peak at around 12,000 in 2007.
Peter Williams, deputy director general of the CML, says the organisation is working with the government to make repossessions as unlikely as possible and is urging for more government support in the form of tax credits and welfare benefits as well as private sector insurances and lending policies to try to ensure mortgages are more “economy proof”.
“Becoming unemployed or seeing interest rates rise should not result in an inevitable arrears situation for borrowers. We are currently identifying how to target those most at risk – such as first time buyers – with information to help them assess their risk and reduce their vulnerability to changing circumstances,“ he adds.
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