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People are still slipping into arrears as the recession continues, but less people are having to be repossessed as mortgage lenders continue their forbearance programmes.

According to the latest figures form the Government's financial watchdog, the Financial Services Authority, with borrowers still struggling to clear their arrears, the total number of loan accounts in arrears has been steadily increasing since early 2007. At the end of the second quarter of 2009, there were 403,000 loan accounts in arrears, an increase of 3,000 or 1% since the first quarter of 2009, and an increase of 30% on 2008's figures.

This isn't surprising – many people were on the edge before the credit crunch hit. Now, without the ability to get hold of more credit, people are struggling to cope with a mortgage, loan debts and other responsibilities like credit cards, car loans and store cards.

But, new arrears fell for a second quarter from 60,000 in the first three months of 2009 to 51,000 in the second quarter of the year – a fall of 14%. Both quarters showed a steady decrease from 68,000 in the last months of 2008 – those who can avoid debt are doing all they can to do so. Also there has been a big drive for professionals – advisers, debt managers and charities – to get out there and help those who are struggling before it's too late.

Also, lenders are doing more to stop people losing their homes – while the numbers of new possessions has grown significantly since the second half of 2007, but the sharply rising trend has stabilised in the last nine months. The number of new possessions after the first six months of 2009 was 1,274 fewer than the 14,884 recorded in the first three months.

Paul Broadhead, Building Societies Association head of mortgage policy, says: "The earlier a borrower gets help, the more likely they are to stay in their home.

"Publicity around the Government schemes and greater lender forbearance is encouraging borrowers to contact their lender earlier. The BSA research shows that where this happens the overwhelming majority of borrowers are able to keep their homes and successfully overcome their arrears problems."

If you are struggling, get help before it's too late. Not facing up to problems will make it harder for a professional to find ways to reduce your debt and will ultimately make it harder for a lender to not repossess your home.

SOURCE: FSA, BSA, 15/09/09

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