There were 16,928 orders for home repossession according to seasonally adjusted data in the October to December period, 15 percent lower than the three months to September.

Separate figures from the Ministry of Justice showed courts in England and Wales issued 42 percent fewer mortgage possession orders in the final quarter of 2009 compared with a year earlier. Given signs of stabilisation in the labour market and expectations that interest rates will stay low for some time, the CML said its forecast of 53,000 repossessions in 2010 now looked too pessimistic. But it warned that the outlook remained uncertain.

"The fact that mortgage arrears and possessions did not rise as much as we feared in 2009 is testament to the effect of low interest rates, and a great deal of concerted effort by lenders, government and the advice sector," said CML Director General Michael Coogan.

"We are not out of the woods yet -- 2010 will still be a challenging year for many borrowers, and some households will inevitably find their finances being squeezed if and when interest rates do eventually rise."

Repossessions for 2009 as a whole came in at 46,000, well below the 75,000 the CML had forecast a year ago but still 15 percent higher than in 2008. (C ) Reuters