Latest figures released by UK Finance has shown that mortgage arrears and possessions are continuing to decline. The figures indicate that there were 76,740 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2018, 8 per cent fewer than in the same quarter of the previous year. Within the total, there were 23,190 homeowner mortgages with arrears representing 10 per cent or more of the outstanding balance. This was 4 per cent fewer than in the same quarter of the previous year.

There were 4,440 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2018, 6 per cent fewer than in the same quarter of the previous year. Within the total, there were 1,080 buy-to-let mortgages with arrears representing 10 per cent or more of the outstanding balance. This was 2 per cent greater than in the same quarter of the previous year. 1,060 homeowner mortgaged properties were taken into possession in the second quarter of 2018, 5 per cent fewer than in the same quarter of the previous year.

520 buy-to-let mortgaged properties were taken into possession in the second quarter of 2018, 24 per cent fewer than in the same quarter of the previous year.

Jackie Bennett, Director of Mortgages at UK Finance said “Arrears and possessions are at an all-time historic low since we first started collecting this data over 24 years ago. While this is positive, last week’s base rate rise coupled with the disappointing uptake of the Support for Mortgage Interest (SMI) loan could see arrears creeping up in the coming months.

“With well over 90% of new loans taken out at fixed rates, most recent borrowers will see no immediate impact from the Bank rate increase. However, anyone with concerns about managing their mortgage should contact their lender to discuss the advice and support available. Repossession is always a last resort.”

Mark Pilling, Spicerhaart Corporate Sales managing director, said “As much as arrears remain historically low, there is the danger that anyone on a tracker or SVR mortgage would be looking at affordability now that interest rates have increased.  The governor of the Bank of England has already suggested that this will not be the last rate rise this year, which is likely to put more pressure on some people.”

“UK Finance recently announced that lenders have signed up to agree common standards, which will help existing borrowers on reversion rates who, because of stricter affordability criteria, are ineligible to move to an alternative product.  However, there are currently over 150,000 mortgage prisoners, but these proposals will only help 10,000 people initially, which is a drop in the ocean.  For the other 140,000 there is a real threat that, as wages stagnate and they remain on high interest rates, they will fall into arrears.  Although it is good that some progress has been made, it is important for lenders, and mortgage owners, to now be looking at all the cases on their books and finding ways to help their clients out of this situation.”