Financial solutions company Think Money has welcomed news that repossessions fell sharply in 2010, compared with a year earlier, commenting that it suggests the financial circumstances of homeowners may have improved despite difficult economic conditions.
But the company warned that there are still difficult times ahead for many homeowners, especially when interest rates rise.
The Council of Mortgage Lenders (CML) said there was a 24% drop in the number of repossessions in 2010, compared with 2009, down to 36,300. Meanwhile, the number of households with mortgage arrears amounting to more than 2.5% of the outstanding balance fell by 13%, down to 169,600.
An expert at Think Money commented:
“Any drop in repossessions and arrears is a good sign. Although the economy is still in a difficult position, it’s likely that a lot of homeowners have taken steps to improve their finances, whether that’s through keeping to a tight budget or entering into a debt solution such as a debt management plan before repossession becomes a possibility.
“Leniency from lenders may have also helped, but equally the troubles of the last couple of years will have prompted many homeowners to be more cautious with their money.
“However, it must be noted that there are a lot of people who are only coping with their mortgage repayments because of low interest rates. When interest rates rise – which could happen this year – we may well see many more homeowners in trouble.