“Remortgaging figures are strong too, with the £76 billion of business last year the strongest since 2008. It’s worth noting that around 94% of those remortgaging are taking out a fixed rate mortgage, suggesting that customers are locking themselves into a fixed rate in anticipation of a Bank of England base rate rise, which may or may not happen in May. And more people are taking longer terms fixes too with more 5 and 10-year fixes available in the market at competitive rates. So far this year nearly half of new fixed rate business has been at 5 years or more, compared to around a third over the last few years. Arrears were at a historic low in 2017 with 89,000 people with arrears balances of 2.5% or more of their outstanding mortgage.”
“However, we are expecting those numbers to increase this year as some households come under pressure from base rate rises and others will be affected by the changes in Support for Mortgage Interest. For those who are not aware, the long-standing support that people can get from the government if they are out of work or receiving pension credit, changed from a benefit to a loan earlier this month. Claimants have to sign up for the loan and, so far, out of the 90,000 eligible, the vast majority have not.”
“UK Finance has been coordinating efforts with lenders, debt advice charities and others to try to ensure recipients are made aware of the changes and take action. We have also been liaising closely with the government. Lenders have been contacting customers and discussing options with them for making up the payments if they do not want to take out the loan. However, that’s not an option for everyone and unfortunately, some may fall into arrears. Repossession is always a last resort and we will continue to monitor the situation closely over the remainder of the year.”