Finance

Mortgage arrears rise as costs continue to increase

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Despite the rise in volume, the overall percentage of mortgages in arrears is relatively low, standing at 1.11% for homeowner mortgages and 0.69% for BTL mortgages

There was a marginal rise in homeowner mortgage arrears in the UK, with figures reaching 96,580 in the first quarter of 2024, according to latest data from UK Finance.

The trade association attributed the 3% percent rise from the previous quarter to the ongoing cost-of-living pressures and increasing interest rates.

The number of BTL properties in arrears remained unchanged at 13,570.

Despite the rise in volume, the overall percentage of mortgages in arrears is relatively low, standing at 1.11% for homeowner mortgages and 0.69% for BTL mortgages.

The UK Finance report also highlighted a decline in the number of homeowner and BTL properties in early arrears, which declined by 2% and 11%, respectively, suggesting a movement of early arrears cases into deeper arrears, alongside a drop in new early arrears cases.

For historical context, during the peak of the global financial crisis in the first quarter of 2009, the number of homeowner and buy-to-let mortgages in arrears was 209,600, significantly higher than the current figure of 110,150.

UK Finance has also found that while there has been a rise in the percentage of properties taken into possession, this increase primarily stems from older arrears cases progressing through the court system.

The total number of possessions in the first quarter of 2024 was 1,470, a 26% decline from the first quarter of 2019 and an 89% decrease from the first quarter of 2009, which marked the peak of the previous possession cycle.

The number of mortgages in arrears, while still low, continues to increase as households remain under pressure from the cost-of-living and higher interest rates, according to Charles Roe, director of mortgages at UK Finance.

He said: Lenders offer a range of support to anyone concerned about their finances, with teams of trained experts ready to help. If you are struggling, reach out to your lender as soon as possible to discuss the support options available.

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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