Latest mortgage lending data from UK Finance has found that there were 93,630 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in Q3 2024, 3% fewer than in the previous quarter (96,090), but 8% higher than the same quarter in 2023 (87,010).
The data also showed that there were 32,860 homeowner mortgages in the lightest arrears band (representing between 2.5- 5% of the outstanding balance). This was 5% fewer than in the previous quarter.
In the third quarter of 2024, 13,000 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance, 4% fewer than in the previous quarter.
Within the total, 5,070 buy-to-let mortgages were in the lightest arrears band (representing 2.5- 5% of the outstanding balance), 10% fewer than in the previous quarter.
Mortgages in arrears accounted for 1.08% of all homeowner mortgages outstanding, and 0.67% of all buy-to-let mortgages outstanding in the third quarter of 2024. 990 homeowner mortgaged properties were taken into possession in the third quarter of 2024, 1 % greater than in the previous quarter.
The number of homeowners with arrears of more than 10% of the outstanding balance, reached its highest ever level of 33,070, marking a 1% increase from the previous quarter (32,820) and a significant 13% increase from the Q3 2023 (29,350).
The number of mortgage possessions on buy-to-let properties remained unchanged from the previous quarter but 73% higher than Q3 2024, while possessions for homeowners rose by 1% in the latest quarter, marking a 39% year-on-year rise.
Eric Leenders, Managing Director of Personal Finance at UK Finance, said “The number of mortgages in arrears has seen a slight decrease compared to the previous quarter, which is good news following increases over the past year. 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. Please reach out to your lender as soon as possible to discuss the help available if you have any concerns. Doing so won’t affect your credit score.”
Commenting on the data, Tom Cuppello, Director at Broadstone, said “While the data encouragingly points to a slight downturn in arrears over the last quarter, the significant increases across the past year point to the huge impact that prolonged high interest rates are having on mortgages.”
“The Chancellor’s Autumn Budget on 30th October outlined the government’s ambitious borrowing agenda, leading the OBR to lift its mortgage rate forecast to a peak of 4.5% in 2027, where it is then expected to plateau for the following years. Compared to the OBRs March 2024 forecast, mortgage rates will now be around 0.3 percentage points higher on average over the forecast.”
“In the months ahead, this shift is likely to bring renewed financial challenges for many borrowers, particularly those transitioning from fixed rates on to higher payments.
“For lenders, this means preparing to support customers through a potentially challenging period as household budgets come under increased strain. Staying agile and prioritising borrower support will be essential, especially as the Government’s Mortgage Charter and the FCA’s Consumer Duty come into play.
“As economic conditions remain volatile, lenders have an opportunity to build resilience within their portfolios, ensuring they’re equipped to navigate future financial headwinds and continue meeting the needs of their customers.”