Figures to December 2009 show the lender experienced a 27% reduction in early arrears (less than three months) and a 31% reduction in late arrears (over three months) since a peak in February last year.

The firm expects the trend to continue for the foreseeable future with all indicators pointing towards arrears reducing back to 2008 levels over the summer.

CHL puts the improving situation down to a pro-active approach from its team. It also cited its cautious underwriting approach during the boom years for protecting the book from many of the problems suffered by other lenders, particularly in the buy-to-let market.

Bob Young, Managing Director of CHL Mortgages, commented:“We are pleased to announce a marked reduction in our overall arrears position which would not have been possible if it wasn’t for the pro-active and decisive action taken more than a year ago. At that time we reviewed and changed our arrears and recoveries strategies, strengthening our Specialist Servicing Team and establishing a Field Team to encourage customer engagements. It was these measures, coupled with a cautious underwriting and credit scoring strategy in the mid-2000’s and the current lower interest rate environment, which have worked in our favour. 

“Our latest figures show a major drop-off from previous peaks on all our key performance indicators and we fully expect this trend to continue in 2010. We have even seen a continuation of our arrears numbers continuing to drop over the recent Christmas period which is further good news, particularly at a time when you might expect some borrowers to use their mortgage payment money for other expenses.”