There were 73,580 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2020, a figure 3% lower than in the same quarter last year, new UK Finance figures have revealed.

Within the total, data showed there were 22,840 homeowner mortgages with more significant arrears – those representing 10% or more of the outstanding balance. This was 2% fewer than in the same quarter of the previous year.

The figures also showed there were 5,000 buy-to-let (BTL) mortgages in arrears of 2.5% or more in the second quarter of 2020, a level 6% greater than in the same quarter last year. Within this, there were 1,270 BTL mortgages in arrears of 10% or more – which was 5% greater than in the same quarter of 2019.

UK Finance suggested the recent increase in BTL arrears is relatively small and from a low-base, and is likely due to the early effects of COVID-19.

The banking body also revealed that 90 homeowner mortgaged properties and 130 BTL mortgaged properties were taken into possession in the second quarter of 2020, falls of 93% and 80% respectively, compared to the same quarter last year.

Bluestone Mortgages managing director, Steve Seal, commented: “While on the surface, today’s figures may look promising, it is likely we will not see the full extent of the COVID-19 crisis on mortgage arrears until government support measures for homeowners end.

“Mortgage payment holidays, for example, have gone a long way towards helping homeowners who have faced financial difficulty during the pandemic, ultimately keeping the number of mortgages in arrears low – at least for the time being.
 
“Once payment holidays end, however, it is likely that some homeowners, particularly those who have been financially impacted by the crisis, will struggle to keep up with their mortgage repayments – something which could affect their credit profile in the long-run. As a result, their chances of securing a remortgage on the high street could suffer, leaving them wondering what the alternative options are.
 
“This is where advisers come into their own. Advisers are able to support borrowers with lending solutions that can be tailored according to their unique circumstances and reassure them that the refinancing they need is within reach.”

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