A total of 76,630 homeowner mortgages were in arrears of 2.5% or more in Q1, a 2% increase on the previous quarterly total, new UK Finance figures have shown.

Within the latest total, the banking body revealed there were 27,700 homeowner mortgages in the lightest arrears band – which represents between 2.5 and 5% of the outstanding balance – a figure 5% greater than Q4 2022.

UK Finance also revealed that 750 homeowner mortgaged properties were taken into possession in Q1, which reflected a significant 50% increase on the data for the previous quarter.

For the buy-to-let (BTL) market, UK Finance’s figures showed there were 7,030 BTL mortgages in arrears of 2.5% or more of the outstanding balance in Q1, which was 16% greater than in Q4 at the end of last year. Within the total, there were 3,420 BTL mortgages in the lightest arrears band, a 33.1% increase on the previous quarter.

In terms of possessions, UK Finance also reported 410 BTL mortgage properties were taken into possession in Q1. This was 28% higher than in the previous quarter.

“Having been in a low interest environment for such a long time, the recent increases in interest rates have put many borrowers into a position they have never experienced before,” commented chief revenue officer at Phoebus Software, Adam Oldfield.

“The figures from UK Finance this morning bear out the fact that increasing interest rates coupled with the rising cost of living is taking its toll. Unfortunately, with around 370,000 borrowers coming off fixed rate deals between April and June, the likelihood is that this trend will continue and is almost certainly going to get worse. This is especially true if, as many expect, the Bank of England continues to put the base rate up.

“Once again there will be a great responsibility for lenders to identify borrowers that may be getting into difficulty and manage the situation with care. With Consumer Duty rules coming into force at the end of July that responsibility becomes more onerous, every lender will need to ensure they have all their systems aligned to ensure the best outcomes for their borrowers.”

Share Story: