Saturday, February 24, 2024
UK

Residential mortgage arrears hit four-year high

Mortgage repayments

Benham and Reeves analysed the latest data from the BoE for the third quarter of this year, looking at the number of homeowners who have fallen into mortgage arrears of over 2.5 per cent of their outstanding balance

More homeowners are finding themselves in mortgage arrears, with the number reaching its highest since the beginning of 2019 having seen an 18.2 per cent rise in the last year.

Benham and Reeves analysed the latest data from the BoE for the third quarter of this year, looking at the number of homeowners who have fallen into mortgage arrears of over 2.5 per cent of their outstanding balance.

The figures show that 87,930 homeowners fell into mortgage arrears during Q3 of this year.

This marks a 7.4 per cent rise versus Q2 of this year and an 18.2 per cent YoY surge. It is also the highest quarterly total seen since the beginning of 2019.

Having previously peaked at a quarterly total of 84,010 in the first quarter of 2021, the number of homeowners falling into arrears on their mortgage had been in slow decline falling to 74,420 in Q3 of 2022.

At the time, interest rates had already started to jump from the record low of 0.1 per cent seen at the back end of 2021, however, they still remained below 2 per cent come the end of September 2022.

Since then the base rate has jumped to 5.25 per cent and it is clear that this rise in the cost of borrowing has had a direct impact on the number of homeowners falling into mortgage arrears. The number of homeowners in arrears has jumped consistently every quarter since to the current high of 87,930.

Today, the number of homeowners in mortgage arrears account for 1 per cent of all total loans outstanding, having also risen every quarter since the third quarter of last year.

Director of Benham and Reeves, Marc von Grundherr, said: Not only have households had to struggle with the high cost of living, but they have also had to contend with the steep rise in interest rates seen over the last year which has pushed the cost of their mortgage repayments up considerably.

With many already stretched to breaking point with respect to their household finances, it’s no surprise that the number of homeowners falling into arrears on their mortgage has climbed so significantly.

He said: The good news is that rates have since been held and while this certainly will not lower the cost of borrowing, it should help stem the increasing number of arrears seen in the last year. For those looking to invest, the present landscape is also likely to offer a greater number of deals.

Leave a Reply