More people in mortgage arrears

Mortgage arrears are low by historical standards

More people are struggling to meet their mortgage payments after recent interest rate rises, figures suggest.

The number of people who were three to six months in arrears increased from 49,720 in the first half of 2004 to 53,960 in the second half.

But this number is still low by historical standards, the Council of Mortgage Lenders (CML) said.

In the first half of 1994, nearly 190,000 people were in short-term arrears, it said.

Repossessions flat

While more people are having problems meeting their payments in the short term, the number of repossessions has remained flat, CML said.

Lenders repossessed 3,070 properties in the second half of 2004, the lowest number of repossessions since 1982.

In the first half of the year, lenders repossessed 3,160 properties.

We are bound to see a rise in longer-term arrears and possessions following behind Michael Coogan, CML director general

The number of people, who were more than six months in arrears to their lenders was also stable - at 38,460 in the first half of the year and 38,130 in the second half of 2004.

Modest rise seen

Continued - but modest - increases in arrears are expected, CML said, as the full impact of five rate rises since November 2003 feed through to households.

CML also anticipates a slight increase in unemployment, which could have an impact on people's ability to meet their mortgage commitments. "But with short-term arrears now increasing, we are bound to see a rise in longer-term arrears and possessions following behind, although we do not expect a dramatic increase,¿ said CML director general Michael Coogan.

Anyone facing difficulties should talk to their lender as soon as possible, CML added.