Home repossessions fall by 20%

THE number of people who had their homes repossessed fell by 20% last year as low interest rates helped keep mortgage repayments affordable, latest figures show. Fewer than one in 625 houses was taken by lenders during 2001, compared with one in 130 in 1991 when repossessions peaked, the Council of Mortgage Lenders said.

The number of people with mortgages in arrears fell 13% on the previous year. The CML credited high employment, the lowest mortgage rates for more than 40 years, and a more responsible approach by lenders.

Figures from the Lord Chancellor's Department also showed a drop in the number of mortgage repossession hearings which had been before county courts in England and Wales. During the fourth quarter of 2001 there were 14,556 mortgage possession actions, just over 17% less than during the same quarter of 2000.

The number of repossession orders fell by 20% to 10,160, nearly 60% of which were suspended giving homeowners the chance to avoid losing their house by paying their current mortgage instalment and some of the arrears.

The CML said more people were taking out insurance to protect their mortgage repayments if they could not work. About 42% of people now have some form of cover, with 31% holding payment protection insurance, which can cover unemployment and sickness, 19% have critical illness cover, and some have both.

But two-thirds of borrowers are not insuring against losing their job, with 42% claiming to have enough savings to pay their mortgage if they had no income for three months.