Lowest arrears rate for more than a decade

And, with fewer than 1 in 100 mortgages in any sort of arrears, at 0.92 per cent the annual arrears rate is also at its lowest for more than a decade.

Beneath the headline figures, the CML quarterly data shows home-owner mortgage arrears running at 1.03 per cent of all loans at the end of 2015, with buy-to-let at a lower rate of 0.31 per cent, continuing the recent trend of a lower prevalence of arrears in the buy-to-let market.

However, the picture is reversed on repossessions, with around 1 repossession per 2,500 mortgages in the buy-to-let market in the fourth quarter of the year, compared with 1 in 5,000 in the home-owner market.

Across the whole market, most had relatively modest levels of arrears (under 5 per cent of the mortgage balance). The number of loans with arrears in the most severe band, representing 10 per cent or more of the mortgage balance, was 23,700 - down from 24,200 at the end of 2014. The modest decline in the most serious arrears band may partly reflect distortions in the timing of possessions, but the overall arrears trend is clearly down.

At 10,200, the total number of repossessions in 2015 was less than half the number in 2014 - down from 20,900. Caution is needed on the year-on-year comparison, because the timing of some possessions may have been affected by the aftermath of a court case which has been causing lenders to review their processes. However, it is likely that the underlying trend is still emphatically down.

CML director general Paul Smee said: “Of course it is good news that the levels of mortgage arrears and repossessions remain low and falling. But, at the risk of sounding as if we are crying wolf, we would continue to urge all borrowers to plan ahead for a time when the interest rate environment may be less benevolent. Lenders do not wish to see borrowers who are coping currently falling into difficulty if and when rates do eventually rise.”