The data indicates that arrears rose by 9.2% within a single quarter between Q3 and Q4, reaching £20.3 billion
The outstanding mortgage balances with arrears saw a significant increase of 50.3% in Q4 compared to the same quarter a year earlier, as per the latest Mortgage Lenders and Administrators Statistics released by the Bank of England.
The data, collected from approximately 340 regulated mortgage lenders, indicates that arrears rose by 9.2% within a single quarter between Q3 and Q4, reaching £20.3 billion.
The percentage of total loan balances with arrears, in relation to all outstanding mortgage balances, rose from 1.12% to 1.23% in the quarter, marking the highest level since Q4 2016.
New arrears cases decreased by 2.6 percentage points from the previous quarter, accounting for 13.2% of the total outstanding balances with arrears, yet remaining 0.2 percentage points higher than a year earlier.
Furthermore, the gross mortgage advances decreased by 13.4% between Q3 and Q4 to £54.0 billion, showing a 33.8% decline compared to the previous year.
The value of new mortgage commitments also dropped by 6.6% from the previous quarter to £46.0 billion, reflecting a 21.2% decrease compared to a year earlier. Excluding the impact of the pandemic, this was the lowest observed since 2013 Q1.
Moreover, the proportion of lending to borrowers with a high loan to income ratio decreased by 2.6 percentage points from the previous quarter to 42.7%, marking a 6.6 percentage point decrease compared to a year earlier.
The data further reveals that the share of mortgage advances for BTL purposes declined by 0.5% from the previous quarter to 7.0%, reaching the lowest level since Q3 2010.
Karen Noye, mortgage expert at Quilter, commented: New Mortgage Lenders and Administrators statistics for the fourth quarter of 2023 paint a very worrying picture of the mortgage market. The statistics show that the value of outstanding mortgage balances with arrears is more than 50% higher than it was a year ago and has jumped almost 10% (9.2%) in just one quarter.
This shows that the large increase in mortgage rates seen over the last couple of years is really starting to bite for some borrowers and this is unfortunately causing them to fall into arrears as they simply can’t afford to keep up with their increased payments, she said.
She added: Positively, the statistics show that new arrears cases dropped by 2.6% from the previous quarter, to 13.2% of the total outstanding balances with arrears, but remained 0.2% higher than a year earlier. This may well continue to climb again though as more people come off fixed term mortgages set when rates were low.
