The Council of Mortgage Lenders announced that repossessions fell from 8,200 in Q3 2012 to 7,700 in Q4, the lowest quarterly number since 2007.
Whilst the fall in arrears and possessions has been welcomed, many fear that households are still in danger of getting into difficulty.
David Brown, commercial director of LSL Property Services, said: “Lenders and homeowners alike will take heart from the fact that repossessions have hit their lowest level in five years, in spite of the ongoing squeeze on real incomes and the tottering national economy.
“While lacklustre wage growth is still being eaten into by inflation, surprisingly resilient employment figures have helped keep the number of both arrears cases and repossessions in check.
“But the role of rock-bottom Bank rates can’t be overstated. For those in the most financial trouble, reduced monthly payments on the back of the record low interest rates have given them the chance to get their household finances in order, when in other times, they would have faced falling into arrears.”
Ray Hugill, chairman of the Association of Arrears Mediators, said: “With interest rates so low affordability is at an all time high but if rates were to increase people could be stung.”
Hugill said that whilst improved affordability had clearly helped to reduce the number of repossessions it was not the only factor.
“The fall can be attributed to a number of factors. Whilst affordability is at an all time high householders have also benefited from increased forbearance.”
He added that the figures will also be helped by the fact that when lenders have used field agents to try to resolve issues with arrears they have had “increasing success”.
David Brown added: “It is essential that lenders continue to show forbearance and look after customers who are struggling by switching them to interest only, allowing them to take payment holidays or extend their mortgage terms, where practical.
“Likewise, borrowers must seek help, preferably before they miss a payment, speaking to their lender or one of the specialist - and free - debt agencies, such as Citizens Advice Bureau.”
