Fewer than one in 400 mortgages led to repossession last year, with the repossession rate of just 0.23 per cent less than half that experienced throughout the first half of the 1990s. The second half of 2007 saw 13,500 repossessions which were almost identical to the 13,600 recorded in the first half of the year.

Previous forecasts from the CML had suggested that there would be 30,000 repossessions in 2007, but the actual figure is nearly 10 per cent less at 27,100. However, the figure is still increasing when compared to figures for 2003 and 2004 which reported the lowest ever levels at fewer than 10,000 a year.

Furthermore, less than half a per cent of all mortgages have accumulated arrears of more than six months at the end of 2007, and the profile of arrears has returned to virtually the same levels as in the first half of 2006.

Michael Coogan, CML Director General, comments: “Lenders take their responsibilities to borrowers facing repayment difficulties very seriously, and many go to exceptional lengths to provide debt counselling, reschedule payments, extend loan

terms, or in some circumstances even allow payment breaks. They abandon repossession action right up to the last moment if they can reach a payment solution consistent with both the borrower’s and the lender’s interests.

“Despite this, the number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage

funding markets. No-one is necessarily to blame for this – even the best risk assessment cannot provide a crystal ball insight to the future for each particular borrower.”

The Association of Mortgage Intermediaries (AMI) has also welcomed the news. Director, Richard Farr, comments: “News that the number of repossessions was lower last year than previous predictions, is very positive news for consumers, and the industry.

“Although 2008 may be a difficult year the UK mortgage market is very different from the US and we do not expect the same level of difficulties to arise. Lenders and brokers in the UK have been much more responsible in their dealings with consumers and the market conditions remain reasonably positive.”

While forecasts for 2008 have optimistically indicated that the level of arrears and repossessions may well be less than anticipated; the CML has warned that there is “no room for complacency,” as funding pressures remain and continue impacting on the adverse credit sector, meaning that struggling homeowners could fall into arrears and, in the worst case, have their home repossessed.

Mr Coogan adds: “Anyone who thinks they might be heading into difficulty should contact their lender, as problems are easier to resolve if they are tackled at an early stage. Lenders want to avoid repossessions just as much as borrowers do.”

© Fair Investment Company Ltd