UK Finance’s latest arrears and possessions data for second quarter 2023 reveals there were 81,900 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2023. This represents a 7% increase on the previous quarter.
Within the total, there were 30,940 homeowner mortgages in the lightest arrears band (representing between 2.5% and 5% of the outstanding balance). This was 12% greater than in the previous quarter.
There were 8,980 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 28 per cent greater than in the previous quarter.
Within the total, there were 4,810 buy-to-let mortgages in the lightest arrears band (representing between 2.5% and 5% of the outstanding balance). This was 41% greater than in the previous quarter.
Mortgages in arrears accounted for 0.93% of all homeowner mortgages outstanding, and 0.44% of all buy-to-let mortgages outstanding in the second quarter of 2023.
UK Finance data shows that 610 homeowner mortgaged properties were taken into possession in the second quarter of 2023, 19% fewer than in the previous quarter.
In addition, 440 buy-to-let mortgaged properties were taken into possession in the second quarter of 2023, 7% greater than in the previous quarter.
A UK Finance spokesperson insisted that although any rise in arrears is worrying, overall numbers remain low with less than one per cent of homeowners and less than half a per cent of landlords behind on their payments.
“Lenders have been preparing for any continuing increases in arrears, for example with the launch of the Mortgage Charter, and have already helped over 200,000 borrowers before they have got into financial difficulty by restructuring their repayments.
The spokesperson added: “The number of homeowner and buy-to-let possessions in Q2 remain close to historic lows but are expected to continue to rise in line with our mortgage market forecast given the ongoing cost of living challenges”.
Commenting on the latest UK Finance data, Phoebus Software chief revenue officer Adam Oldfield (pictured) says: “Unfortunately, the increase in the number of mortgages in arrears is no real surprise given the increase in borrowing costs and the rising cost of living.
“We have to hope that lenders have been preparing for this exact situation. Looking at the number of homeowner mortgages taken into possession, which fell compared to the previous quarter, it looks as though that may be the case and lenders are showing an increased level of forebearance in this area.
He adds: “However, the level of arrears and possessions in the buy-to-let sphere is worrying. The rising costs of rents in the private sector is well reported, so it has to be a concern to lenders that the number of landlords in arrears has increased by such a high percentage.
“Landlords will no doubt come under the microscope again, so perhaps Michael Gove’s call for the EPC regulations to be delayed is a better idea than at first received. We all know how vital the rental sector is, especially when there are so many barriers to get onto the property ladder, so lenders will need to be talking to their landlord clients before the situation gets any worse.”
