The numbers of repossessions and cases of mortgage arrears both rose in the first half of this year, but both remain at extremely low levels by historical standards, according to new results published today by the Council of Mortgage Lenders.

The second half of 2004 saw the lowest levels of repossessions with at total of 3,070 cases. During the first half of 2005 that figure rose to 4,640 cases.

According to the CML, the half-yearly repossession rate in the first half of this year was around 1 in 2,500 mortgages, compared with around 1 in 250 when repossession rates peaked in the second half of 1991.

Mortgage arrears also rose to 57,220 – up from 53,960 in the second half of last year and 49,720 in the first half of 2004. This equates to 0.50% of all mortgages (compared with 0.47% and 0.43% in the second and first halves of last year).

Arrears of 6-12 months accounted for 30,980 cases, compared with 26,920 in the second half of last year and 26,980 in the first half of 2004.

The CML expects the rising trend to continue over its three year forecast period, but the absolute numbers are set to remain relatively small. The likelihood is that, as long as the wider economy performs as expected, repossession rates will peak at perhaps 12,000 a year during 2007, and subsequently stabilise.

Peter Williams, CML Deputy Director General, commented:”It now seems clear that the second half of 2004 marked the trough in the number of mortgage arrears and possessions. Arrears and possessions now look set to rise a little, but only to the sort of levels experienced in the past few years. A re-run of the early 1990s is certainly not on the cards.

“We are working with the Government and the industry to try to make repossession as unlikely as possible. This involves meshing state support, in the form of tax credits and welfare benefits, together with private sector insurances and lending policies to try to ensure that we make mortgages more economy-proof. Becoming unemployed or seeing interest rates rise should not result in an inevitable arrears situation for borrowers. We are currently identifying how to target those most at risk – such as first-time buyers – with information to help them assess their risk and reduce their vulnerability to changing circumstances.”