Copy article

Arrears and Repossessions News as we close 2023

Journalist: Newsteam, Newsteam

ended 21. December 2023

The Money Charity published stats for November 2023

Arrears and Repossessions According to the Financial Conduct Authority, at the end of Q3 2023 there were 175,825 mortgage loan accounts with arrears of more than 1.5% of the current loan balance. This is 5.1% more than revised numbers for the previous quarter and 16.9% up on Q3 2022. 42.3% of payments due for loans in arrears were received in Q3 2023. UK Finance reports that 87,930 (1.00%) of homeowner mortgages had arrears equivalent to at least 2.5% of the outstanding mortgage balance in Q3 2023, 7.4% up on the previous quarter. Over the last year, mortgages in arrears have increased by 37.0 a day. UK Finance estimates that there were 630 homeowner properties taken into possession in the UK in Q3 2023, down from 700 in Q3 2022. This equates to 6.8 properties being possessed every day, or one property being possessed every three hours and 47 minutes. This number was previously low due to the pandemic related moratorium on forced possessions, but is now approaching pre-pandemic levels.

  • As we move into 2024 we will be seeing arrears increase or decline ?
  • 1.4 million clients are due to renew their mortgage in 2024 - will the increase in arrears continue as a consequence of these renewals ?
  • With interest rates forecast to reduce throughout 2024, will this offer some reprieve for mortgage holders ?

7 responses from the Newspage community

Copy all

Copy

Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
On the one hand, we close the year with inflation down to 3.9% with pressure on The Bank Of England, to reduce the base rate sooner than expected, which in turn will drive down interest rates from lenders - with inflation reducing this should reduce standard living costs for many consumers, and if we see a reduction in mortgage interest rates for renewals, this again will ease the burden for consumer spending - I expect arrears to ease for consumers as we forge through 2024. That said we have a government that has an election to win, which could put a spanner in the works.
Copy

Editor
Justin Moy
Managing Director at EHF Mortgages
These figures unfortunately will get worse before they improve, whilst mortgage rates are improving they will still push up the household costs along with food and fuel. Around 50% of mortgage borrowers haven’t felt that increase yet as they hang onto their cheap legacy rates, they could be masking a multitude of financial problems. Even if borrowers haven’t renewed yet it’s important to make a start planning for the next 12 months at least.
Copy

Platinum
Elliott Culley
Director at Switch Mortgage Finance
Although mortgage rates and inflation are now reducing, they are still high. This had led to and will unfortunately result in more mortgage holders going into arrears. Lower mortgage rates may give some respite, but it won't be enough to rescue everyone from a dire situation.
Copy

Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Whilst recent drops in interest rates are welcome for all households trying to balance the family finances, the wider cost of living increases continue to bite hard.

With many borrowers due to come off fixed rate deals onto the new rates it’s almost inevitable we’ll still see arrears rising into 2024. The sad fact is that those with poor credit are offered the worst deals at a time when every penny counts. It’s counter productive but sadly an industry norm. Schemes to help tackle financial problems have helped but there’s a long way to go.
Copy

Graham Cox
Director at Bridging Hub
The mortgage charter offers some respite for homeowners in financial difficulty, and mortgage rates look set to continue falling next year. This means 'rate shock' for those remortgaging will be less, well, shocking.

Nevertheless, how the economy performs in 2024 is unclear, and a mild recession is still quite possible. If people start losing their jobs, arrears could soar. Keep everything crossed for a soft landing.
Copy

Adam Smith
Founder at Alfa Mortgages

Undoubtedly, as we step into 2024, there is a clear indication that repossessions will surge. This surge is anticipated to be predominantly driven by individuals transitioning from ultra-low interest rates to current rates, having already reached their affordability limits.
Copy

Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Whilst these numbers are never nice to read, it is important to look at them in context. We are coming out of a prolonged period of record low-interest rates, which have been dubbed ultra-low interest rates. As rates increased arrears were inevitable, some people will have cut their cloth based on that level of interest rates and have no capacity to pay more, and others will be the victims of unfortunate circumstances with health or employment. However, if we go back and look at the arrears figures for Q3 2008, just prior to the financial crash and the beginning of the ultra-low interest rate period, the base rate was at a slightly lower level (4.5%) and arrears for that year were around 340000 (FSA data), so we are still well behind the level of arrears that we saw when the base rate was previously around this point. The key advice for anyone who finds themselves struggling is to contact their lender as soon as possible, they will help and have teams set up to do just that.