The number of mortgages in arrears in Q2 2007 has risen to an estimated 125,100, which is 3% lower than in the same period last year, but up 4% when compared to Q4 2006, according to the Council of Mortgage Lenders (CML).

Of the latest figures, the majority (71,800) were in arrears of 3-6 months, while 38,300 were in arrears of 6-12 months, and 15,000 more than 12 months. Around 1% of all mortgages were in arrears

At 14,000, the number of properties taken into possession in the first half of this year rose by nearly 18% compared with the previous half-year (July-December 2006) , and nearly 30% compared with the first half of 2006. Although significantly higher than in the recent past, when possessions reached extremely low levels, the number remains low by historical standards. It equates to around one in 840 mortgages ending in possession in the first half of this year.

Michael Coogan, CML director general, said: “Interest rates are clearly higher than many were expecting, and are set to remain so. And the greater risks inherent in sub-prime lending are resulting in significantly higher levels of repossession in that part of the market compared to mainstream experience. This impact has been underestimated in our past market data, which we have now revised. While the revisions are naturally unwelcome, more accurate market information is important. We will work to further improve data on both mainstream and specialist sectors.