Trade association ups optimism as interest rate cuts make morgage payments more affordable

The Council of Mortgage Lenders has downgraded its forecast on the number of repossessions by 15%.

The trade association said that large cuts in interest rates had made mortgage payments more affordable even for those who had less cash.

“[They have] made it easier for households who suffer a loss of income to continue to pay their bills,” it said in a press release today. “Lower mortgage rates mean that struggling borrowers build up arrears more slowly, allowing greater scope for lenders to work with borrowers experiencing temporary falls in income.”

The CML said it expected around 360,000 mortgages to be in arrears of 2.5% or more of outstanding balance at the end of this year, up from 182,600 at the end of 2008. It said it was now expecting around 425,000 borrowers more than three months in arrears at the end of this year, lower than their previous forecast of 500,000.

The body also praised government and industry initiatives such as mortgage rescue for help and comfort they offer to people, saying that more people were making contact with their lender and “in most cases get help.”