UK Finance’s latest mortgage arrears and possessions update for the third quarter of 2018 has revealed that there were 77,600 homeowner mortgages in arrears of 2.5 percent or more of the outstanding balance in the third quarter of 2018 showing that arrears remain at a historic low. This is 5 percent fewer than in the same quarter of the previous year. Within the total, there were 24,090 homeowner mortgages with more significant arrears (representing 10 percent or more of the outstanding balance). This was unchanged from in the same quarter of the previous year.

There were 4,660 buy-to-let mortgages in arrears of 2.5 percent or more of the outstanding balance in the third quarter of 2018, 1 percent fewer than in the same quarter of the previous year. Within the total, there were 1,150 buy-to-let mortgages with more significant arrears (representing 10 percent or more of the outstanding balance). This was 3 percent greater than in the same quarter of the previous year. 1,080 homeowner mortgaged properties were taken into possession in the third quarter of 2018, 19 percent fewer than in the same quarter of the previous year. 500 buy-to-let mortgaged properties were taken into possession in the third quarter of 2018, 17 percent fewer than in the same quarter of the previous year.

Jackie Bennett, Director of Mortgages at UK Finance, said“It is encouraging that homeowner arrears and repossessions remain at historically low levels, which shows the vast majority of borrowers continue to repay their mortgages in full and on time each month. We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the advice and support available.”

Mark Pilling, Managing Director at Spicerhaart Corporate Sales, who deal with arrears and repossessions on behalf of lenders, said “The latest arrears and possessions statistics reveal that while arrears and possessions on residential properties remain historically low, there has been a 3 percent increase in the number of buy to let mortgages in significant arrears compared with the same quarter of the previous year. These figures suggest that the problems with Universal Credit are now really starting to impact landlords. Last month, the Residential Landlord Association revealed that 61% of landlords with tenants receiving Universal Credit have had problems with non-payment and arrears, and on average, these tenants owe 49% more than they did a year ago.”

“Universal Credit has been plagued by problems since it was introduced, and while the Government announced in the Budget that more money will be dedicated to the new welfare system, it is clear that much of the damage has already been done. Many claimants experienced huge delays in receiving their money, forcing them into arrears, and many are receiving far less than they did with the old system, which means in many cases, they simply do not have enough money to pay their rent on their reduced incomes.”

“From a lenders point of view, it is important that they keep a close eye on their buy to let customers who have tenants who are on or are soon to be moved onto Universal Credit so they are able to work out the best solution for those who are struggling so that repossession is a last resort.”

Leave a Reply