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Home possessions at lowest level in 40 years

There were 4,580 homeowner possessions in 2018, the lowest number since 1980, according to data from UK Finance.

Back in 1980 there were 3,480 possessions alongside 6.2 million outstanding homeowner mortgages, but by the end of last year there were 9 million outstanding mortgages.

UK Finance stated the relatively low repossession rate had been aided by the low interest rates and more flexibility from lenders to help those in financial difficulty.

Of the latest repossessions 1,130 homeowner mortgaged properties fell into the fourth quarter of 2018, alongside 540 buy-to-let mortgaged properties.

This was down 3 per cent and 14 per cent respectively on the same quarter of the previous year.

In the fourth quarter of 2018 there were 77,610 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance, 5 per cent fewer than in the same quarter of the previous year.

In the buy-to-let space 4,690 mortgages were in arrears of at least 2.5 per cent in December, unchanged from the previous year.

Jackie Bennett, director of mortgages at UK Finance, said: “Homeowner possessions reached their lowest level in almost 40 years in 2018, aided by a historically low interest rate environment and lenders showing continued flexibility when working with borrowers in financial difficulty.

“Mortgage arrears also remain at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month.

“We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the options and support available to them. Repossession is always a last resort.”

Shaun Church, director at Private Finance, said homeownership was “remarkably secure” at present despite growing uncertainty elsewhere.

He said: “Doomsayers will argue that trouble is brewing for when rates do start to rise again. But lenders have stringent tests in place that ensure borrowers can afford their loan if rates rise by a far higher percentage than is likely.

“This means that, assuming there are no dramatic changes in their circumstances, borrowers should be able to comfortably accommodate slightly higher repayments when rates to begin to creep up.”

He said the low level of arrears and possessions meant high loan-to-value (LTV) products should be made more widely available.

He said: “Affordability tests are clearly working, and with a secure system in place, there is no reason why loans of 95 per cent or above should present any danger.

“Saving for a deposit is one of the biggest financial hurdles many will face, and for some is unsurmountable.

“Better availability of high LTV mortgages would help to remove this barrier and put buyers’ homeownership prospects on a more equal footing.”

Source: FT Adviser