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Q3 arrears and repossessions data - UK Finance

ended 09. November 2023

This morning, UK Finance published its Q3 mortgage arrears & possessions data. Selected points below, full report >> here <<. Newspage asked brokers for their views (bottom).

  • There were 87,930 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2023, 7 per cent greater than in the previous quarter.
  • Within the total, there were 34,110 homeowner mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 10 per cent greater than in the previous quarter.
  • There were 11,540 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2023, 29 per cent greater than in the previous quarter.
  • Within the total, there were 6,270 buy-to-let mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 33 per cent greater than in the previous quarter.

8 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Arrears have shot up recently as some battle their new, mega high mortgage payments. However, this is still the tip of the iceberg. Most of the pain is yet to be felt by many who haven’t yet come off their fixed rates. Also, many are clinging on by their finger tips and getting into arrears elsewhere. These desperate people will filter through to the numbers over the next six months and there will be a real human cost to these figures. 2024 is shaping up to be a year to forget.
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Craig Fish
Director at Lodestone Mortgages
This doesn't make for great reading and shows the immense strain households are under. Landlords are having a particularly tough time of it based on this evidence. We are having more and more conversations with people who are experiencing rate shock. Households up and down the country are on a knife edge. Many are having to make adjustments to their mortgages to make them more affordable, such as extending the mortgage term. As a firm, we aren't seeing many borrowers fall into arrears or, worse, face repossession yet, but that doesn't mean it's not happening across the rest of the UK. However, we are now starting to see lenders' rates fall, and if this continues, especially at higher loan-to-values, it may be that fewer customers face difficulties going into 2024.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
This further jump in the arrears and repossession numbers shows how brutal things are right now for many homeowners. Despite some recent rate reductions, even the market-leading rates are 3% or more than the low rates homeowners will be leaving behind when their deals end. There are 1.6 million more mortgages ending in 2024 so we are only seeing the thin edge of the wedge especially given that increasing mortgage costs are only one part of the overall cost of living crisis already decimating household finances. This data is sadly going to get worse in the months ahead.
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David Stirling
Independent Financial Advisor at Mint Wealth
People felt that low interest rates would go on forever. Sadly, they haven't and this is now really biting borrowers, as we enter an uncertain era and one the banks really aren't helping them with. Borrowers aren't stupid and steering them towards locking into 5- or 10-year fixed rate deals to get better rates is leaving them feeling rather sour. With criteria for interest-only borrowing now so obscure and strict, it's not really an option for your typical borrower who is struggling, so we are usually left to look at extending terms, sometimes up to age 80, or recommending total upheaval and downsizing to help cushion the blow of increased monthly payments. We can only hope that the predictions for next year and some lowering and stabilisation of rates will stop more people going to the wall.
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Dan Osman
Head of Later Life Lending (Age 55+) at UK Moneyman
This data sadly shows how the walls are increasingly closing in on many borrowers. In cases reminiscent of 2008, we are seeing a lot of older borrowers coming to us because they are under threat of repossession. The lack of compassion shown by some of the major banks is staggering. When challenged, some will admit to not having offered any support to the vulnerable. This is especially true in the case of widows who may never have had any involvement in the household finances and are now being left to deal with things for the first time. We are seeing people being referred to equity-release-only firms and being told they don't have enough equity for a lifetime mortgage and not being offered any alternatives when there are many options out there including specialist 50+ interest only and repayment mortgages available up to 90. More joined-up working and consumer education is needed to avoid these blatant cases of foreseeable harm.
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Riz Malik
Independent Financial Adviser at R3 Wealth
There are two parts to the ticking mortgage time bomb, which this data shows is getting louder all the time. The first is those coming off ultra-low rates, the second is those at the end of their term on interest-only mortgages. With a flat housing market and soaring mortgage repayments, more are likely to fall into arrears very quickly.
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Justin Moy
Managing Director at EHF Mortgages
We have mostly seen clients pre-rate change, so the fall out from increased mortgage payments will still take some time to filter through, but I do expect to see more borrowers prioritising their monthly bills, and that will inevitably cause late or missed payments. Initially that may be utility bills before finance payments are at risk. Mortgage lenders will need to consider their criteria on late payments and be more flexible, otherwise a considerable amount of borrowers will end up in the specialist market, with higher rates not due to base rate pressures.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
With each day that passes, more people are coming off low fixed rates onto far higher new rates and that's against a backdrop of the cost of living crisis. As a result, thousands are finding themselves mortgage prisoners with few options to go elsewhere and often carrying a lot of unsecured debt on top. It's taking its toll. For those small business owners who took bounce-back loans to keep them afloat during the pandemic, it's a veritable tsunami. The waves keep coming and the water keeps rising. Worst of all, those whose debts are the worst get penalised by higher interest rates that simply compound their problem. Isn't it time to rethink how we handle this? Debt help is out there but lenders need to do more or we may face widescale evictions and people whose credit profile will make it virtually impossible for them to get private sector tenancies.