THE number of mortgages in arrears, and the number of properties taken into possession by mortgage lenders, remained flat in the first half of the year compared with the second half of 2003, according to figures from the Council of Mortgage Lenders (CML).

Set against the 11.8m mortgages outstanding at the end of June, only 3,240 properties were repossessed in the first half of this year - around 1 in every 3,650 mortgages. This compares with 3,660 in the second half of 2003, and 4,230 in the first half of last year. At their peak in 1991, there were over 75,000 possessions.

The number of mortgages in long-term arrears continued to decline, but at a slower pace than in recent periods. At the end of June, there were 39,470 cases of mortgage arrears of over six months. This compares with 42,480 at the end of December last year, and 48,170 at the end of June 2003.

Short-term arrears showed a more marked flattening out. The number of 3-6 month arrears cases was 51,020 at the end of June, compared with 52,650 at the end of December 2003, and 61,710 at the end of June last year.

The stock of properties in possession awaiting disposal by mortgage lenders at the end of June was1,930. This is the lowest stock of possessions on record since the CML began collecting data on the stock of possessions in 1990.

CML director-general Michael Coogan said: "With interest rates rising, it looks as if the long run of declining arrears has now flattened out. But we are forecasting only a very marginal increase looking ahead, with perhaps 60,000 cases of short-term arrears and fewer than 9,000 repossessions by the end of next year, reflecting higher mortgage costs within a stable economic environment.

"Most people will ride out interest rate increases with just a moderate tightening of belts. But for a minority, particularly those who have significant other financial commitments, higher interest costs will be harder to absorb.

“Anyone worried they cannot afford their mortgage payments should discuss the situation with their lender, as there may be ways to reduce the monthly mortgage bill and so avoid accumulating arrears.”