Mortgage arrears figures remain at historic low

Homeowner mortgages in arrears figures remain at historically low levels according to the latest figures from UK Finance. The figures published reveal that there were 76,580 homeowner mortgages in arrears of 2.5 per cent or more in the first quarter of 2019, four per cent fewer than in the same quarter of 2018. Whilst the number of homeowner mortgages with more significant arrears fell by three per cent year-on-year. 1,380 homeowner mortgaged properties were taken into possession in the first quarter of 2019, a slight increase on the previous year. This was driven in part by a backlog of historic cases which are being processed in line with the latest official guidance from the Financial Conduct Authority (FCA).

Other figures showed that there were 4,620 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the first quarter of 2019, 3 per cent greater than in the same quarter of the previous year. Within the total, there were 1,200 buy-to-let mortgages with more significant arrears (representing 10 per cent or more of the outstanding balance). This was 12 per cent greater than in the same quarter of the previous year. While we are seeing mixed signs in buy-to-let arrears, these do not indicate a clear increasing trend at this stage. Additionally, increases are small and from a low base.

Also, there were 570 buy-to-let mortgaged properties were taken into possession in the first quarter of 2019, 14 per cent fewer than in the same quarter of the previous year. Whilst 1,380 homeowner mortgaged properties were taken into possession in the first quarter of 2019, 10 per cent greater than in the same quarter of the previous year, but well below the levels seen between 2009 and 2014 (see chart below). This slight increase in possessions has been driven in part by a backlog of historic cases which are being processed in line with the latest regulatory requirements*. Lenders continue to show flexibility to borrowers in financial difficulty and possession is always a last resort.

Responding to the latest figures Mark Pilling, MD of Spicerhaart Corporate Sales said “The latest mortgage arrears and possession stats from UK Finance reveal buy to let possessions are down, but arrears are up. As a result of recent regulatory changes, there are many private landlords looking to get out of the sector, and this rise could be down to the fact that some tenants who have been given notice are now not making their rent payments.”

“In terms of residential mortgages, arrears are down slightly – although those in arrears of 10% or more remain fairly static – but possessions are up by 10%, a fairly significant increase. And while they are still not at the levels seen after the financial crisis, they are slowly creeping up.”

“And I think we will now see these residential possession numbers continue to increase every quarter, ballooning at the end of the year as borrowers start to run out of options to get themselves out of difficulty. And while forbearance is still an option for some, lenders need to look at all the circumstances of each customer and get the right strategy in place.”

“We work with lenders to manage their arrears and repossessions and find solutions that best suit them and their customers. Lenders should try and identify any borrowers who are already having difficulties managing their mortgage – or are likely to in the future – and take action before repossession becomes the only option.”