BC-BRITAIN-REPOSSESSIONS/CML (UPDATE 1)

UPDATE 1-UK lenders trim 2010 home repossession forecast

(Adds Ministry of Justice data, details)

LONDON, Aug 12 (Reuters) - Britain's lenders expect to repossess fewer homes this year than they had previously forecast, the Council of Mortgage Lenders said, after data showed a steady fall in the number of mortgages in arrears.

The CML cut its forecast for 2010 repossessions to 39,000 from 53,000 and said the number of homes taken into possession from April to June fell to 9,400 from 9,800 in the first three months of the year.

Some 47,700 homes were repossessed in 2009 as a whole -- well below annual totals of 75,500 and 68,600 in 1991 and 1992. Quarterly repossessions peaked at 13,200 in the first three months of 2009 and are now a fifth lower than a year ago.

Low interest rates for existing home owners and a relatively limited rise in unemployment to date have meant there has been far less of a surge in repossessions than in the wake of Britain's early 1990s recession.

The government also introduced measures to make it easier for homeowners to defer some of their mortgage payments if they face a temporary, unexpected drop in income -- for example if their employer reduces their hours because of the recession.

The proportion of mortgages more than three months in arrears fell to 2.17 percent in the second quarter from 2.22 percent in the first quarter and 2.48 percent in the second quarter of 2009.

"Mortgage difficulties have so far been contained at lower levels than we expected at the start of the year, and by comparison to the 1990s recession," the CML said.

Separate data from the Ministry of Justice also released on Thursday confirmed a downward trend in borrowers getting into difficulties.

Courts in England and Wales made 13,389 orders for home repossession in the second quarter according to seasonally adjusted data, down from 18,813 a year ago and 7 percent fewer than the 14,385 orders made between January and March.

However, 46 percent of the orders were suspended, the same proportion as in the previous quarter, meaning the total number of actual home repossessions is likely to be much lower.

Nonetheless, the CML said higher interest rates, a rise in unemployment or a possible removal of government support for households having difficulty paying mortgages could reverse the downward trend in repossessions.

"While we don't want to cry wolf, it seems obvious that the ongoing prognosis for arrears and possessions is far from a healthy all-clear," the CML said. (Additional reporting by Fiona Shaikh; Editing by Hugh Lawson)