Mortgage arrears continued to fall towards historic lows in the third quarter, with government support for household incomes through the Coronavirus Job Retention Scheme (CJRS) remaining in place until the end of September.

New figures published by UK Finance showed that Q3 saw a reduction of 2,400 mortgages in arrears compared with the previous quarter, with a total of 74,210 homeowner mortgages in arrears of 2.5% or more of the outstanding balance.

Within this total, there were 25,110 homeowner mortgages in early arrears, which include those between 2.5% and 5% of the balance in arrears, a decrease of 5% on the previous quarter and 10% fewer than the same period in 2020. Barring an initial uptick at the end of March 2020, these early arrears figures have remained lower than the number seen before the pandemic began, UK Finance stated.

Also within the overall total, there were 27,980 homeowner mortgages with more significant arrears, those representing 10% or more of the outstanding balance, which was 70 more cases than the previous quarter. This figure has risen from a low base since Q1 2020, although the rate of increase has slowed.

UK Finance suggested that these customers, who were already in relatively deep arrears positions prior to the pandemic, will likely have made use of the full six months of payment deferral schemes and are equally likely to be receiving further support through lenders’ tailored forbearance.

In the buy-to-let (BTL) space, the figures showed there were also a total of 5,670 BTL mortgages in arrears of 2.5% or more of the outstanding balance in the third quarter of 2021 – a decrease of 6% compared with the previous quarter.

MPowered Mortgages distribution director, Emma Hollingworth, commented: “Lenders did exceptionally well to innovate and adapt during the pandemic, using a wide range of technology to serve their customers efficiently through a difficult period. It was especially pleasing to see lenders and the government work together to ensure the housing remained a driving force behind the UK economy.

“However, there is no room for complacency, with both the stamp duty holiday and the furlough scheme having come to an end, coupled with rising inflation and house prices, all of which may well have a negative financial impact on many throughout the UK.

“Lenders will now play a vital role in supporting its customers and will need to be proactive in order to avoid a sudden jump in arrears as we enter the final months of the year, especially now that government support has tailed off.”

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