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The number of mortgages behind with payments has also dropped, and at the end of June there were 178,200 loans with arrears equivalent to 2.5% or more of their mortgage balance. This was 5% lower than at the end of March, and 17% lower than last year.
The CML now expects 175,000 mortgages to end the year 2.5% or more in arrears, compared with the previous forecast of 205,000. A total of 39,000 repossessions is now forecast for 2010 as a whole, compared with the previous forecast of 53,000.
However, the headline arrears figure masks differences in the experience of different arrears bands. For example, in the lowest arrears category (between 1.5% and 2.5% of balance) there has been a marked improvement from the peak in the first quarter of 2009, when 1% of all mortgages were in this category, to 0.7% now. But in the highest 10% or more arrears category, the proportion of mortgages has remained almost static at 0.23%.
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CML Director General Michael Coogan said: "Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession.
"However, the safety net for borrowers is weakened by the prospect of higher interest rates, a possible rise in unemployment, a counter-productive stigma hanging over mortgage payment protection insurance, uncertainty over future debt advice funding, reduced government support for mortgage payments, and mortgage rescue schemes being reviewed as part of the deficit reduction plan.
"While we don't want to cry wolf, it seems obvious that the ongoing prognosis for arrears and possessions is far from a healthy all-clear. We hope the coalition government will not risk undermining the chances of extending the welcome trends this year by removing support mechanisms that work."
(CD)
