Ananova:

A smaller than expected rise in reposessions this quarter has led the Council of Mortgage Lenders to dramatically reduce its outlook for the year.

The full-year forecast for repossessions has been reduced to 48,000 from a gloomy 65,000.

The number of homes that were repossessed rose by just 3% in the third quarter of the year to 11,700 from 11,400.

With unemployment continuing to rise, it was thought the number of people unable to keep up with mortgage repayments would increase more significantly.

The Council of Mortgage Lenders predicted at the beginning of the year that around 75,000 homes would be seized in 2009.

Council of Mortgage Lenders director general Michael Coogan said: "We are glad to have been wrong on our previous forecast for mortgage repossessions this year.

"Low interest rates, and lenders' forbearance policies, have helped to cushion many households facing financial problems.

"And although the economy is not out of the woods yet, we no longer expect a dramatic rise in properties being taken into possession unless interest rates rise from the low levels that most commentators now expect to persist for some time."

New Ministry of Justice figures released today also showed there had been a fall in the number of repossession claims issued to courts in England and Wales during the third quarter.

Sky News business correspondent Joel Hills said: "Taken at face value, these figures seem to suggest some of the doom and gloom surrounding unemployment and house prices were perhaps overstated at the beginning of the year.

"However, there is also a sense that perhaps the incredible policy decisions regarding interest rates and quantative easing has created a bubble in which asset prices are being propped up by public spending, fiscal stimulus and monetary policy.

"But as soon as you remove the planks everything falls down again."