Mortgage arrears and possessions at all-time historic low

Written by Oliver Wade
09/08/2018

In the second quarter of 2018, there were 76,740 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, 8% lower than the figures reported in the second quarter of 2017, according to the most recent statistics from UK Finance.

Within that total, there were 23,190 homeowner mortgages with arrears representing 10% or more of the outstanding balance, again, 4% fewer than in the same quarter of the previous year.

When looking at the buy-to-let (B2L) market, there were 4,440 mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of this year. The B2L market experienced a similar trend to the homeowner mortgage market, as this figure is down 6% from last years’ figure.

Of that total, 1,080 of the B2L mortgages had arrears representing 10% or more. This, however, is 2% greater than the percentage reported in the same quarter last year.

During Q2 10,60 homeowner mortgages properties were taken into possession, 5% less than last year, while B2L mortgaged property possession plummeted by 24% compared to last year, with 520 homes being taken.

Commenting on the figures, UK Finance director of mortgages Jackie Bennett said: “Arrears and possessions are at an all-time historic low since we first started collecting this data over 24 years ago.

“While this is positive, last week’s base rate rise coupled with the disappointing uptake of the Support for Mortgage Interest (SMI) loan could see arrears creeping up in the coming months.

“With well over 90% of new loans taken out at fixed rates, most recent borrowers will see no immediate impact from the Bank rate increase. However, anyone with concerns about managing their mortgage should contact their lender to discuss the advice and support available. Repossession is always a last resort.”

Bluestone Mortgages director of sales and marketing Steve Seal added that it will be “interesting” to see whether last week’s Bank of England base rate increase will influence the next set of results.

“For those who may have slipped into the red, arrears often stem from events such as an illness, accident or divorce. These borrowers, however, are not repeat offenders; and many show healthy financial records before and after. As an industry, we need to reassure those going through financial difficultly that there is help and access to specialist lending available, which will take these kinds of complexities into consideration,” Seal concluded.

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