S&P credit analyst Mark Boyce said: "The annual repossession rate has been declining since 2009, and touched a five-year low in third-quarter 2012.”
“Nevertheless, high unemployment, weak house prices, and sluggish wage growth are still pointing to weak credit performance for UK mortgage borrowers in the coming quarters, in our view."
The report titled Scenario Analysis: Where Are UK Mortgage Repossessions Going? uses updated economic assumptions from last November’s S&P analysis titled Scenario Analysis: Are UK Mortgage Borrowers Between A Rock And A Hard Place? to project repossessions from September 2012 until December 2013.
Boyce added: "We believe that part of the reason for relatively resilient mortgage performance is that many lenders remain reluctant to foreclose on severely delinquent loans, opting instead to relax the original loan terms.
“This trend is difficult to both measure and predict and introduces uncertainty into our repossession forecasts."