7% rise in UK Mortgage Arrears


Latest UK Finance data has indicated that homeowner mortgages in arrears rose by 7 per cent (93,680) in the final quarter of 2023 compared to the previous quarter.
Buy-to-let mortgages in arrears also increased 18 per cent to 13,570 compared to the previous quarter.

540 homeowner mortgaged properties were taken into possession in Q4, down 14 per cent on the previous quarter. 500 buy-to-let mortgaged properties were taken into possession in Q4, 11 per cent greater than the previous quarter.

44 percent of mortgage holders are finding it difficult to keep up with bills and credit commitments. This is up from 36 per cent in September 2023.

In recent months mortgage rates have been falling. This will help ease the payment shock for the 1.5 million homeowners and 230,000 BTL mortgage holders whose fixed rate deals are due to end this year.

Lender stress tests have also helped ensure that borrowers are able to keep up with their mortgage payments, even when their interest rate rises above those in place when they first took out their mortgages.

However, we know that other factors outside the control of lenders can also impact customers’ ability to manage their mortgage payments, so we would encourage anyone worried about their finances to reach out to their mortgage lender at the earliest opportunity to discuss the options available for their circumstances.

Meanwhile, the number of repossessions remains very low. Repossession is only ever a last resort and after other options have been explored. Across BTL and homeowner mortgaged properties, a total of 1,040 were repossessed in Q4 2023. This compares with nearly 2,000 in Q4 2019 before the pandemic.

Separate figures showed that ,ore than one third (35%) of mortgage holders are showing at least one sign of financial difficulty. One in five (21%) have used savings in the last 12 months to ensure they can make mortgage payments. Whilst almost one in four (23%) mortgage holders have used credit in the last 12 months to ensure they can make mortgage payments.

Mortgage arrears continuing to rise

Eric Leenders, Managing Director of Personal Finance, UK Finance, said “The number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost of living and high interest rates take their toll on households. Importantly, help is available to anyone worried about their finances – please reach out to your lender as soon as possible to discuss the support options available. Lenders have teams of trained experts ready to help. Contacting your lender to find out what support is available won’t affect your credit score.”

Richard Lane, Chief Client Officer at StepChange Debt Charity, said “We know from our own clients that people tend to prioritise their mortgage and fall behind in other areas when they’re struggling to make ends meet, so it’s especially worrying to see mortgage arrears creeping up across the UK.

“Higher mortgage payments and wider cost of living pressures have eroded people’s ability to cope financially, so it’s not surprising that more are turning to credit or savings to cover essential housing costs. However, with no indication of when rates might come down, people risk finding themselves trapped in long-term problem debt as that credit ultimately becomes unsustainable.

“We would urge the government to consider how it can step in to help those in financial difficulty now and in the near future. All government cost of living support is due to end in March, removing an essential safety net for low-income households. The mortgage charter was introduced last year in response to high rates putting pressure on households – updating and extending these measures could be beneficial in supporting struggling mortgagers.

“Charities like StepChange offer free and impartial advice if you’re experiencing problem debt. Our new homeowner hub provides a one-stop-shop for mortgage-based advice and support.”

Alastair Douglas, CEO of TotallyMoney said “The latest figures show that more and more homeowners and landlords are falling into arrears, and we can expect the trend to continue as 1.7 million cheap fixed-rate deals come to an end this year.

“If you’re somebody who’s struggling, contact your lender and ask for support — and remember this won’t impact your credit rating. However, missed payments can — and they could stay on your credit file for up to six years. If these persist, you might end up in mortgage arrears, leading to court action and even repossession.

“Banks need to be more proactive in issuing this support, and must reach out to people who they think might be in difficulty. Otherwise we won’t just be looking at a mortgage crisis, but a mental health one too.”

Mark Tosetti, Group Partnerships Director at Movera, a group of home moving businesses including ONP Solicitors, said “Unfortunately these figures show that mortgage arrears figures continued to climb over the last quarter, particularly for buy-to-let properties. Landlords are having a particularly tough time. However, it’s good to see homeowner possessions falling.

“Hopefully, over the current quarter, arrears and possessions levels will improve as confidence returns to the market as we seek positive indicators of interest rates looking to decrease in 2024. But we mustn’t forget that there are still many UK households who are yet to come off historically low fixed rates and onto higher rates.. As an industry we need to work hard to support lenders and borrowers. As ever, our focus at Movera will be on providing expedient, high quality service for those looking to move or remortgage this year.”

Simon Webb, managing Director of Capital Markets and Finance at LiveMore, said “Consumer Duty is obviously working, as the number of homeowner-mortgaged properties taken into possession is down by a significant 14%. However, the report clearly demonstrates that consumers are still struggling to make ends meet, with nearly 100,000 homeowners unable to pay their mortgages.

“When we see figures like this, we need to be particularly mindful of our older generations who are trying to pay unusually high SVRs when in fact they could potentially get a new mortgage. We surveyed more than 2,000 homeowners aged 50 to 90 plus and discovered that only 4% of 50+ year olds thought they could get a mortgage, which is outrageous. Later life lenders continue to widen their remit of affordability and the types of property they’ll lend against. We lenders and brokers need to let homeowners know this before they end up in these stressful situations.”


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