Welcome decline gives no cause for complacency as a large number of households, who are just coping, still remain vulnerable to shocks that may arise from the economic uncertainty ahead.
Repossessions as a proportion of all mortgages remained steady at 0.09% in the first quarter, the same proportion as in the previous quarter and down from 0.12% in the first quarter of 2009. The number of repossessions was 9,800, down from 10,600 in the previous quarter and 13,200 in the first quarter of 2009.
The proportion of mortgages in arrears also fell. The total proportion of loans with arrears equivalent to 2.5% or more of the mortgage balance was 2.38%, down from 2.52% in the previous quarter and 2.81% in the first quarter of 2009. The number of loans in arrears was down from 206,800 at the end of the first quarter of 2009 and 196,400 at the end of last year to 186,300 at the end of the first quarter of this year.
However, the fall was more marked in the lower arrears bands than among those with more substantial arrears, where the reduction was only very modest. This suggests that low interest rates and relatively stable employment have been helping to prevent new households falling into difficulty, but that many households with more entrenched problems are still struggling to restore their financial position and repay arrears. This debt overhang will require careful management over an extended period.