81,900 Homeowner Mortgages Are In Arrears

19th August 2023

Around 81,900 homeowner mortgages are in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of the year, up seven per cent on the previous quarter.

According to UK Finance figures, within the total figure there were 30,940 mortgages in the lightest arrears band, which is between 2.5 and five per cent of the outstanding balance. This is a 12 per cent increase on the prior quarter.

The report added that 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. Around 28 per cent more than in the previous quarter.

UK Finance added that within that total there were 4,810 buy-to-let mortgages in the lightest arrears band, a rise of 41 per cent than in the previous quarter.

It continued that mortgages in arrears made up for 0.93 per cent of all homeowner mortgages outstanding, and 0.44 per cent of all buy-to-let mortgages outstanding in the second quarter of 2023.

‘Alarming' rise in possessions
On the possessions side, there were 610 homeowner mortgaged properties taken into possession during the period, which is 19 per cent down on the previous quarter.

It continued that 440 buy-to-let mortgaged properties were taken into possession in the second quarter, seven per cent greater than the prior quarter.

Jamie Lennox, director at Dimora Mortgages, said that the data was "alarming and certainly heading in a direction we wouldn't want to see".

He continued: "The main concern is this is only the tip of the iceberg, The data so far won’t have factored in the customer who will now be landing on sky-high rates we’ve been experiencing in the last few weeks. With the real damage likely to unravel in 2024."

Lewis Shaw, owner and mortgage expert at Shaw Financial Services, agreed that arrears figures will continue to get worse through 2024 as over 1.4 million households will face remortgaging at higher rates.

“You can’t jack up interest rates at the speed we’ve seen over the past 18 months and not cause households to sink below the waterline. Thankfully the Mortgage Charter will give some light relief for owner-occupiers, however the buy-to-let market seems to be dead in the water already,” he added.