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Arrears and Repossessions Update

Journalist: Newsteam, Newsteam

ended 27. February 2024

The Moneycharity February 2024 report provided the following information

  • 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 93,680 (1.07%) of homeowner mortgages had arrears equivalent to at least 2.5% of the outstanding mortgage balance in Q4 2023, 7.0% up on the previous quarter. Over the last year, mortgages in arrears have increased by 53.0 a day. UK Finance estimates that there were 540 homeowner properties taken into possession in the UK in Q4 2023, down from 567 in Q4 2022. This equates to 5.7 properties being possessed every day, or one property being possessed every four hours and 8 minutes. This number was previously low due to the pandemic-related moratorium on forced possessions but is now approaching pre-pandemic levels. 
  • In England and Wales, in October to December 2023, according to the Ministry of Justice, every day 47.7 mortgage possession claims were issued, and 29.4 mortgage possession orders were made. 254.2 landlord possession claims were issued, and 195.7 landlord possession orders were made every day. Compared to Q4 2022 mortgage possession claims have risen by 39% and orders by 9%, while landlord possession claims increased by 14% and landlord possession orders by 12%. Mortgage possession claims now sit at around 65% of 2019 (pre-pandemic) levels, however repossessions in Q4 2023 are down 19% on the same period in 2022.

Whats your take on this ?

10 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
Yet again confirming that higher interest rates are having a real impact on borrowers, with arrears on mortgages - the only positive from this report, is that repossessions are showing a downward curve, but the argument is for how long ? These figures will only increase, throughout this year, putting pressure on Threadneedle Street and its sidekick Government, to act sooner on interest rate cuts and initiate an effective spring budget.
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Simon Bridgland
Director at Charwin Private Clients
Its an inevitable but very worrying trend, repossessions will without doubt keep increasing this year as more people struggle with just the normal monthly payments, let alone making up any arrears. Sadly there isnt and good news just at the moment for those on variable rates, hoping they will drop. I would advise anybody struggling to contact their lenders to see if they are part of the Mortgage Charter, try and arrange a payment break before any arrears happen. In this time, try to clear any unsecured borrowing which would usually have higher interest charges. Ditch any plans of getting finance for cars etc and this just exasparates the problem.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whilst the figures read like an opening chapter of a Stephen King novel, there will be more frightening figures to read in the coming chapters as more of the 1.5 million households come off their low-cost fixed rates over this year and face further pressure on their already stained finances. The number of households that will fall into arrears will only grow over the remainder of 2024.
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Ben Perks
Managing Director at Orchard Financial Advisers
The increase in arrears is not surprising and i fear that these figures could just be the start. The Mortgage Charter gave borrowers 6 month options to reduce payments and try and get back on track, but I dont think they were significant to provide the respite that people needed. Have they just put a 6 month delay in the increase in reposessions? The next data release on this will be very telling.
Also, debt charity StepChange recently reported that 1 in 4 mortgage borrowers have used credit to make mortgage payments in the last 12 months, this is alarming and shows the pressure that household budgets are under.
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Bob Singh
Founder at Chess Mortgages
These figures are worrying but not unexpected.

The lingering effects of hiked interest rates are filtering through and with further payment shocks yet to come this picture can only worsen.

Behind each repossession. Is a sad story, a reason why this has happened and it’s not always interest rate related. Lenders are too often keen to instruct solicitors than find out the real cause and work out solutions. Many good lenders do make the effort but it’s far easier to do a letter to solicitors to start proceedings. Borrowers who bury their head in the sand have themselves to blame.

Lenders and advisers need to ensure their clients are fully protected.

A cut in rates won’t save those in the process but may save some of those teetering on the edge.
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Craig Fish
Director at Lodestone Mortgages
This report is a stark reminder of the cost of living crisis and the fragile state of finances in households up and down the country, and in particular the dire consequences of the increasing interest rates to homeowners and landlords alike. With the continued high rates, and further £1m borrowers coming off low rates in 2024 this number wont improve anytime soon.
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Gary Bush
Financial Adviser at MortgageShop.com
The arrears and repossessions update brings sad news indeed especially relating to the number of daily possession orders approved in HM courts between October and December 2023. To further read that potentially another 175,825 mortgage account holders have arrears and could very well add to the previous possession statistics in the coming months. For any mortgage holders in difficulty with their payments, they should immediately contact their preferred financial advice firm for assistance in negotiating a preferable outcome with their lenders, gaining impartial advice and assistance often navigates to better outcomes for households.
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Mark Robinson
Managing Director at Albion Forest Mortgages
The statistics of arrears and repossessions is heartbreaking. Each of these figures is a person that has obviously hit hard times.
I do think given recent years events it is unsurprising that there is a rise in arrears and whilst not good, these numbers could actually be viewed as positive that they are not higher.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The early rate reductions at the start of the year have been followed by rate hikes. Rate volatility is still rife and this is bad news for homeowners and investors who are already struggling or facing coming off historically low rates into the new order. Whilst the moratorium on repossessions has ended, the Mortgage Charter has seen at least some relief but lenders are still woefully limited in what they can offer when budgets simply don't stretch far enough. The sad fact is that those who can least afford it, pay the most in interest. As someone who deals extensively with borrowers in arrears, it's not just the property that's the issue. Mental health and money worries go hand in hand. There's little sympathy for many in this situation, particularly landlords. But for many investors, their rental income is their only income. What happens if their tenant can't pay? Not only does the investor face losing their investment but their own homes too. We need a rethink.
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David White
Chief Operations Officer at Simply Lending
This does not come as a surprise in a market where people have looked to stretch affordability more than a balloon artist making a giraffe. That coupled with deals moving onto far higher rates when the fixed term ended has tipped more people over the edge than usual.