The Council of Mortgage Lenders has admitted the number of households in arrears by the end of the year is likely to exceed its previous forecast of 170,000, after confirming 168,000 cases were in arrears at the end of September. This represents an 8% increase from the figure at the end of June, with 1.44% of mortgages at least three months in arrears.
The CML also confirmed 11,300 properties were repossessed in the third quarter, up from 10,100 in the second quarter, though it is standing by its prediction of 45,000 repossessions for the year.
Buy to let was identified by the trade body as one area with particular payment problems, with 1.58% of buy-to-let mortgages in arrears, up from 1.1% in June, an increase blamed on falling rents and an oversupply of rental property in some areas.
Michael Coogan, director general of the CML, emphasised lenders remained committed to ensuring repossession remained a last resort.
He added: "While lenders cannot change the underlying causes of financial difficulty, such as unemployment, they can make sure that their response to borrowers is constructive and seeks to avoid repossession wherever other solutions can be found.
"That is what lenders are doing, meaning that the number of repossessions is likely to be contained to the levels we forecast at the beginning of the year, despite the worsening in economic and funding conditions through the year. We and our members are continuing to look at every possible way of minimising repossessions, consistent with considerations of the borrower's financial prospects."
