The CML now expects 39,000 repossessions and 175,000 mortgages to end the year in arrears of 2.5 per cent or more, down from its previous forecast of 53,000 and 205,000 respectively.
The revision comes after news that mortgage repossessions continued to fall in the second quarter. There were 9,400 repossessions, down from 11,800 in the second quarter of 2009.
But the CML warned against complacency and said that yesterday’s headline figures masked differences in health between arrears bands.
For example, there has been an improvement in the lowest arrears category – between 1.5 per cent and 2.5 per cent of the total balance. But the number of mortgages in arrears of 10 per cent or more has remained static, the CML said.
Although yesterday’s news was welcomed, some industry analysts are still concerned about the future. “With interest rates possibly due to rise next year and some borrowers trapped on their lenders’ standard variable rates, arrears and repossessions may actually deteriorate now, even as economic recovery continues,” said David Newnes, estate agency managing director of property firm LSL.
CML director general Michael Coogan said government budget cuts could reduce debt advice funding and government mortgage rescue schemes: “While we don’t want to cry wolf, it seems obvious that the ongoing prognosis for arrears and possessions is far from a healthy all-clear.”