Rates risk for repossessions

 
Julian Harris
Follow Julian
REPOSSESSIONS fell by 24 per cent last year, while the number of mortgages in arrears also dropped, the Council of Mortgage Lenders (CML) said yesterday.

Yet stubbornly high inflation has heightened the risk of a hike in interest rates, which would lead to an upturn in repossessions, the CML said.

“As we go through 2011, the number of people facing payment pressures may increase if interest rates rise,” said director general Michael Coogan.

The CML expects there to be 40,000 repossessions this year, up from 36,300 in 2010.

At the end of last year, the number of mortgages with arrears of 2.5 per cent or more of the outstanding balance fell by 13 per cent.

Of all loans, just 1.49 per cent were in arrears.

The number of repossessions continued to fall in the final three months of 2010, to 7,900, down 11 per cent from the third quarter of the year – the fifth quarter in a row to have recorded a drop.

In a separate statement, the CML revealed a 22 per cent rise in the value of buy-to-let mortgages last year, which now account for 11.5 per cent of all mortgages.

“Tenant demand seems set to remain high in the face of continuing deposit constraints to entering the owner-occupier market,” Coogan said.