The number of properties taken into possession by mortgage lenders dropped by some 20% in 2001, according to figures released today by the Council of Mortgage Lenders. Fewer than 1 in 625 mortgages in the UK ended up as a repossession in 2001, compared with 1 in 130 back in 1991 when repossessions peaked.

The number of mortgages in arrears also fell by nearly 13% in 2001. And virtually all arrears categories showed improvements between the first and second half of the year.

The CML also released new consumer research showing that 42% of all mortgage holders now say they have some form of relevant insurance that would help them to pay their mortgage if they became sick. 31% of borrowers say they have mortgage payment protection insurance, with 19% saying they have critical illness insurance and 7% permanent health insurance, and with some borrowers having more than one type of insurance.

However, among these only payment protection insurance protects against unemployment - so more than two thirds of borrowers are still choosing not to insure against this risk. Why is this? According to the research, it may be because people believe they have sufficient savings to tide them over. 42% of mortgage holders said they would use savings to pay their mortgage if they had no income for three months.

The good news is that younger borrowers, who may well be more financially stretched and more vulnerable to loss of income through unemployment, are more likely than older households to have mortgage payment protection insurance. While 40% of those aged 25-34 said they had this insurance, the figure dropped to 30% among the 35-44 age group and 28% among those aged 45-54. This is encouraging, as younger borrowers are potentially more likely to need insurance to tide them through a period of difficulty. Older home-owners are more likely to have built up a personal 'safety net' of equity and savings, and are less likely to have high mortgages relative to their income than their younger counterparts.

Commenting on the arrears and possessions figures and the new consumer research, CML Deputy Director General Peter Williams said: "Economic stability, low interest rates and high levels of employment have been major factors influencing the substantial reduction in mortgage repayment difficulties over the past year. The CML and lenders are also actively working towards a holistic approach to ensure that home-ownership remains sustainable for people who choose it. This relies on a mixture of responsible lending, good arrears management, effective risk assessment and measures such as private insurance to offset risk and State support to help those in the worst cases of difficulty.

We are continuing to work with the insurance industry and the Government to seek further improvements and refinements to the overall package of safety net measures available to help home-owners. In particular, we think that better targeted State support has an important role to play in complementing borrowers' and lenders' actions to reduce the risk of mortgage arrears."