Council of Mortgage Lenders reports UK arrears at lowest rate for over ten years
The all-time low interest rates affect people in different ways, for savers it means that they are getting virtually no return on their savings account, but for those takin out a mortgage it can mean that they are making lower monthly repayments making their home purchase affordable and have more available money.
It can also have another affect that can be good news all round, fewer people falling into arrears, which according to the Council of Mortgage Lenders (CML) has resulted in less people having their homes re-possessed which the CML says is the lowest for more than ten years. According to their figures, the quarterly data shows that home owner mortgage arrears is running at 1.03% of all loans at the end of 2015, the buy to let mortgages are better still at 0.31%, which demonstrates that this market continues at a lower rate of arrears.
However, the news is not so good for that sector in re-possessions which at one per 2,500 is not as good as the homeowner market which has one re-possession for every 5,000, possibly reflecting the reluctance of mortgage providers to take possession of someone’s home rendering them homeless. CML believes that the decline in arrears, which they say is modest, could be due to some distortion in the timing of these, but they do concede that the overall arrears trend is now down on 2014, last year being half of the numbers reported in 2014.
Paul Smee, the director of CML does however urge caution and implores borrowers to carefully plan ahead and to take into account the reality that he interest rate will not stay low for ever, re-iterating that lender never want to see those who are now coping well, fall into difficulties when the rates do rise, a rise which is inevitable.
Kevin Purvey, who is chairman of the Intermediary Mortgage Lenders Association (IMLA) also urges caution, saying that although the figures released are a sure sign of stability, he went on to point out that the rigours of lenders’ affordability checks will help borrowers and they are designed to help ensure that borrowers are able to comfortably service the loan over the whole period. He went on to say that: “Continuing delays to the Bank of England’s first rate rise should not breed complacency.”
Picture: Images Money