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Repossessions fall but mortgage arrears increase

The number of houses repossessed dropped 10 per cent in the second quarter of 2009, according to the latest figures published by the Council of Mortgage Lenders.

CML figures show 11,400 homes were repossessed in Q2, down from 12,700 in the first three months of the year.

But the CML’s data shows the number of borrowers in arrears continues to increase.

At the end of June this year, the number of borrowers in arrears by three months or more increased to 270,400, up from 264,700 in the first quarter or 2009 and substantially up from 152,700 at the same point in 2008.

The CML says that the decrease in repossessions is due to a combination of continued low interest rates shows and lenders trying to work with borrowers to help manage arrears.

But it warned that if the economy remained weak and unemployment continued to grow both arrears and repossessions would increase in the second half of the year.

CML’s head of policy Jackie Bennett says: “With unemployment rising and the economy still weak, the outlook will remain challenging for the rest of this year and into 2010. But today’s data shows that lenders are committed to helping borrowers manage their way through temporary payment problems and get their mortgage back on track over time, avoiding possession where possible.

“Clearly, low interest rates are also helping borrowers who are committed to working to resolve their arrears, paying what they can – and when they can – towards their mortgage, and maintaining good communication with their lender.”

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