Home repossessions rise by 31%

The number of home repossessions has increased to the highest level in five years, data from UK Finance shows.

The analysis shows that mortgage possession claims increased by 34% year-on-year in Q2, climbing from 3,991 to 5,343. These involve a lender taking homeowners to court before repossessing their home as the owners have fallen behind on their mortgage repayments.

The report shows that 980 mortgaged properties were repossessed in Q2. This is up 8% on Q1 and 31% on Q2 2023. The number of homeowner mortgages in arrears was broadly unchanged throughout Q2 2024 compared to the previous quarter.

The data shows a marginal decrease (less than 0.5 per cent) in homeowner mortgages in arrears to 96,070 in Q2 2024, compared with Q1 2024. The number of BTL properties in arrears showed a marginal increase (just over 0.5 per cent) compared with the previous quarter, to 13,570.

The overall proportion of mortgages in arrears remains low, at 1.10 per cent of homeowner mortgages and 0.69 per cent of BTL mortgages.

While the percentage of mortgaged properties taken into possession has risen, this is largely due to the HM Courts Service increasing capacity to work through historic arrears cases

Possessions numbers remain very low compared to historic norms. A total of 1,690 homeowner and BTL mortgaged properties were possessed in Q2 2024. This is 15 per cent lower than the 1,980 seen in Q4 2019, before the pandemic, and 87 per cent lower than the 13,200 seen in Q1 2009 – the peak of the previous possessions cycle during the financial crisis.

Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort after other options have been explored with the customer.

Lender stress tests have ensured borrowers are able to keep up with their mortgage payments, even if their interest rate rises above the rate in place when they first took out their mortgage.

Charles Roe, Director of Mortgages at UK Finance, said “The number of mortgages in arrears has remained broadly flat compared to the previous quarter, which is good news following recent increases. This reflects the fact, that while many households remain under pressure, the challenges of higher rates and the cost of living have begun to ease.

“However, we know that this will not be the case across all households, and lenders want to support anyone who might be struggling. Lenders offer a range of support to anyone worried about their finances. If you are worried about your finances, please reach out to your lender as soon as possible to discuss the support options available. Doing so won’t affect your credit score.”

Mel Spencer, Sales Lead at  Target Group said “The rise in the number of possessions has continued an upward trajectory all year, with both homeowner and buy-to-let possessions on the rise. The biggest surprise may be the number of buy-to-let possessions up a whopping 51% year-on-year.

“The pressures on landlords and tenants have been increasing exponentially with rising mortgage rates and increasing tax pressures forcing many landlords to relay the costs down to tenants in increased rents. Today’s figures demonstrate that, for some, those pressures have just become far too much, but it is alarming as it will further decrease the supply of rental housing,

“A 31% year-on-year increase in homeowner possessions while still significant, looks modest in comparison with the buy-to-let percentages, although the real numbers are higher with almost 1000 people having lost their homes.

“The one positive is that while the number of arrears, compared to last year, are still up 51% for buy-to-let and 17% for homeowners, they have levelled off this quarter, hopefully reflecting the top of the curve and the start of a downward trend as inflationary pressures recede.”

David Miller, Divisional Director at Spicerhaart Corporate Sales, said “While the overall number of arrears remains relatively unchanged, it is encouraging to see those with arrears of up to 7.5% are reducing. Of course, there is clear concern around those in late arrears (7.5% or above), which only continues to rise. This growing cohort of borrowers are the ones that urgently need to seek support and lenders must stay close to.

“The upward growth of late arrears will be key driver in the rise in possessions, although it is positive to see they continue to account for a small proportion of the overall customers in arrears. It demonstrates that lenders are continuing to be proactive and proving that possessions remain a last resort.”