Although representing an 8-year high, fewer than 1 in 400 mortgages led to home repossession in 2007, according to the Council of Mortgage Lenders (CML). And at 0.23%, the repossession rate was less than half the rate experienced throughout the first half of the 1990s. Furthermore, at 13,500, the number of repossessions in H2 2007 was almost identical to the number in H1 2007 (13,600), according to new data from the industry body.

The CML had previously forecast there would be 30,000 repossessions in 2007, but the actual figure is nearly 10% lower than forecast, at 27,100. Although repossessions have risen since their low point of fewer than 10,000 a year in 2003 and 2004, they continue to represent a tiny fraction of all mortgages.

Figures show that fewer than 0.5% of all mortgages had accumulated arrears of more than six months at the end of 2007, and the profile of arrears has returned to virtually the same levels as in H1 2006. Moreover, the rate of 6+ month arrears is only around one-seventh of the level experienced in the early 1990s.

Looking ahead, the CML says it's difficult to forecast the likely level of arrears and repossessions in 2008 as conflicting factors are at work. The good news is that the impact of payment shock is likely to be more muted than previously expected, thanks to the downward path that interest rates now appear likely to follow. But there is no room for complacency. Funding pressures remain, and are having a specific impact on the capacity of the adverse credit sector to meet demand. This may affect arrears and repossessions.

Meanwhile, over the past year, the CML and lenders say they have become concerned about the activities of sale-and-leaseback companies, which typically offer to buy properties from home-owners at less than their market value, and rent them back to the former owner as a tenant.

In theory, this type of arrangement could be a good solution for some borrowers facing mortgage problems. But there is no regulation of this sector and the risk of consumer detriment seems high.

The CML, Citizens Advice and Shelter jointly wrote to the Treasury late last year to urge regulation of this emerging activity. This week the organisations wrote jointly again to urge fairer treatment of home-owners. Within the benefits system at the moment a home-owner who loses their income is severely disadvantaged compared with a tenant in the same position. The industry body has also written to the Treasury to outline the many steps that lenders take to avoid repossessions.