Possessions and arrears fall in Q2

The number of new possessions and arrears cases fell in Q2 2009, according to the latest statistics from the FSA.

New arrears have now fallen steadily to 51,000 in Q2 2009 from 60,000 in Q1 2009 and 68,000 in Q4 2008.

With borrowers still struggling to clear their arrears, the total number of loan accounts in arrears has increased since early 2007. At the end of Q2 2009 there were 403,000 loan accounts in arrears, an increase of 3,000 (1%) since Q1 2009 and up 30% on a year earlier.

Although the number of new possessions has grown significantly since Q3 2007, the sharply upward trend, evident up to Q3 2008, has stabilised in the last three quarters.

In Q2 2009 the number of possessions was 13,610, 1,274 fewer than the 14,884 recorded for Q1 2009. However, this is still 23% higher than a year earlier.

Other data reveals the total value of outstanding residential loans has hit £1,200bn, an increase of £12bn compared to a year earlier.

The proportion of new lending for home purchases exceeded remortgage business for the first quarter since Q3 2007. New lending on home purchases accounted for 51% of total lending in Q2 2009, up from 36% in Q1 2009. This was the first quarter to show more than a 50% share since Q4 2007.

New loans for home purchases to first time buyers has increased slightly from about £3bn in Q1 2009 to £5bn in Q2 2009. However, proportions of new lending done at loan to value of more than 90% continue to fall, from a peak of 15% in early 2007 to under 3% in Q2 2009.