Mortgage arrears rise amid rate hikes


Some landlords may not be in a position where they can charge rents which will cover their mortgage, UK Finance said

The number of mortgages in arrears has climbed as cost-of-living pressures and higher rates on home loans bite, according to a trade association representing lenders.

Some landlords may not be in a position where they can charge rents which will cover their mortgage, UK Finance said.

Across the UK, 87,930 homeowner mortgages were in arrears in Q3 of 2023, 7 per cent more than the earlier quarter.

The number of buy-to-let (BTL) mortgages in arrears was 11,540, a 29 per cent rise during the same period.

UK Finance’s report said: The rise in arrears is led by the combined effect of cost-of-living pressures as well as higher interest rates.

Especially, interest rate pressures are felt more acutely in the buy-to-let sector, where landlords may not be able to increase rents to cover the increases in their payments, it added.

UK Finance said mortgage arrears are still running at less than half the levels seen in 2009.

This reflects the benefits of lender stress tests carried out to ensure borrowers will be able to keep up with their mortgage payments, even if their interest rate rises above those in place when they first took out their mortgages, the report added.

UK Finance expects the combined number of homeowner and buy-to-let mortgages in arrears to remain below 1 per cent of the total number of mortgaged properties by the end of this year.

Around 630 homeowner mortgaged properties were repossessed in Q3 2023, 9 per cent lower than in the earlier quarter.

And 450 buy-to-let mortgaged properties were repossessed during the same period, unchanged from Q2 2023.

Lenders have support available to anyone struggling with their mortgage payments.

There are a range of options which will be tailored to customers’ individual circumstances.

If customers need support, or are concerned about their finances, they should get in touch with their lender to discuss the options available for their circumstances, UK Finance said.

Around 48 mortgage lenders representing over 90 per cent of the market have signed up to the Government’s mortgage charter, committing them to additional support for borrowers.

This includes giving customers approaching the end of a fixed-rate mortgage the opportunity to lock in a deal and request a better like-for-like deal if rates change up to six months ahead, and a guarantee of no repossession within 12 months of a first missed payment.

Eric Leenders, MD of personal finance at UK Finance, said: Anyone concerned about making their mortgage payments should contact their bank at the earliest.

He added: All lenders have teams of experts ready to help anyone struggling with their mortgage payments with tailored support. What’s more, reaching out to your bank to find out what support is available would not affect your credit score.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Invest for Property. The information provided on Invest for Property is intended for informational purposes only. Invest for Property is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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