Mortgage balances with arrears at highest level since 2014

The number of mortgages in arrears, relative to all outstanding mortgage balances, increased to 1.28% in Quarter 1, according to figures from the Bank of England.

The data shows an increase of 1.23% in the final quarter of 2023, taking it to the highest proportion since the end of 2016. The value of outstanding mortgage balances with arrears increased by 4.2% quarter-on-quarter, hitting £21.3 billion. This was also a 44.5% annual increase and the highest level since the third quarter of 2014.

This was 44.5% higher than a year ago. The report shows that cases of new arrears were two percentage points down on the previous quarter, with new arrears representing 11.4% of the total outstanding balance of late mortgages. The data also revealed a decrease in the value of gross mortgage advances, reflecting homeowners purchasing cheaper homes to offset higher mortgage rates. While mortgage debt is rising, experts believe there is no systemic risk to the housing market.

The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 30.8% from the previous quarter to £60.1 billion, and was 31.2% greater than a year earlier.