Fewer homes repossessed due to low interest rates

Posted on November 17th, 2010 | Categories - House Prices

Repossessed homes have fallen as UK interest rates remain manageable.

Low interest rates have meant that borrowers can keep up with their monthly mortgage repayments.

The rate of repossessed UK homes has fallen and mortgage holders have found it easier to meet their repayments due to low interest rates, according to the Council of Mortgage Lenders (CML).

In the three months to October, 8,900 homes were seized, which is 5% lower than the figures revealed during the second quarter of the year.

CML director general Michael Coogan said: “Despite the severity of the economic slowdown, and the likelihood of only a slow and protracted recovery, a combination of low interest rates and the commitment of borrowers, lenders, the government and debt advisers has helped to keep mortgage payments problems in check so far”.

He continued: “But we cannot take falling arrears and possessions for granted, and the recent welcome trend may reverse”.

The number of borrowers falling behind with their repayments dropped slightly too, according to the report.

Mr Coogan said: “Many households are adept at adjusting their spending and prioritising their bills to manage their way successfully through periods of temporary difficulty. But the capacity to do this will depend on individual circumstances, the extent to which income falls or mortgage costs rise, and how soon they can get back into full employment”.

The price of UK homes has also fallen – the monthly index published by the Department for Communities and Local Government recorded a 0.7% drop in the three months to September. The government report supports the research of Halifax, Nationwide and the Royal Institution of Chartered Surveyors, which highlighted a similar reduction in purchase prices.