The number of homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter stood at 96,070, broadly unchanged quarter-on-quarter, UK Finance has revealed.

The trade association’s arrears and possessions report for Q2 also found that in the lightest arrears band (between 2.5% and 5%), there were 34,420 homeowner mortgages outstanding, which is a 3% drop on the first quarter of the year.

Despite this drop, the number of mortgages in arrears of between 7.5% and 10%, and 10% and over, have increased by 3% and 2% respectively.

Divisional director at Spicerhaart Corporate Sales, David Miller, said: "While the overall number of arrears remains relatively unchanged, it is encouraging to see those with arrears of up to 7.5% are reducing. Of course, there is clear concern around those in late arrears (7.5% or above), which only continues to rise. This growing cohort of borrowers are the ones that urgently need to seek support and lenders must stay close to."

In the second quarter, the number of mortgages in arrears accounted for 1.1% of all homeowner mortgages outstanding, while buy-to-let (BTL) mortgages outstanding made up 0.69% of all BTL mortgages outstanding in the second quarter.

The number of BTL mortgages in arrears in the 2.5% or more band increased by 1% quarter-on-quarter, although the number of BTL mortgages in the 2.5% to 5% band has dropped by 6% in the same period.

In terms of repossessions, the number of homeowner mortgaged properties and buy-to-let mortgaged properties that were taken into possession increased by 8% and 13% respectively.

Chief sales and marketing officer at Phoebus, Richard Pike, added: "A 13% increase in possessions of buy-to-lets in the second quarter of 2024 might come as a blow to some. However, we can probably attribute a portion of this to the fallout from the previous high energy and general costs of living that have taken their toll on renters and landlords alike.

"Now that inflation and energy prices have dropped, and the market is so much more buoyant as we move through the second half of 2024, I would hope that the equivalent figures this time next year will look a lot more promising.

"The 8% increase on possessions of homeowner properties can be similarly explained. Gladly, Consumer Duty rules will have helped a lot of homeowners avoid falling into this group, as the handful of lenders who might not have been so understanding during times of financial hardship, are now obligated to help their borrowers as much as possible."

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