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Homeowners in arrears

Journalist: Jake Carter, Mortgage Introducer

ended 22. November 2023

Homeowner mortgages in arrears up 7% amid higher interest rates, according to UK Finance.

How do you support clients facing these challenges?

What wider support do these clients need? Government support perhaps?

How has this impacted the market on the ground?

10 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
Whilst the increase is from a small starting figure, the trend is worrying when you consider most rate expires are to come between now and the end of 2024 (around 1.4 million). With any client that does approach us for support, we do look to see what the lender can offer, including the basic Mortgage Charter support measures, and then whether there is a need to look at some further options the lender can help with. Typically the sooner you seek help, the more help and options are available. The Mortgage Charter should really stretch to a 2yr window, for most lenders is the shortest product term, and offering interest-only payments for that timescale and allows for many of the current economic issues to be in better shape, and hopefully improved mortgage rates. 6 months defers the problem, but many borrowers are asking what they do once that 6 months finishes. Make it significant enough to ride what is a short-term situation.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
It is crucial to adopt a personalised strategy for each client. Beyond standard offerings and suggestions like tailored repayment plans, extending the term, re-fixing interest rates, or exploring government-backed schemes that provide temporary relief for struggling homeowners, a holistic assessment of the family’s financial situation remains paramount.

Government support at this time needs to include targeted initiatives such as enhanced financial counseling services, public advertisements, temporary interest holidays like during the Covid period etc. Some have suggested grants to alleviate short-term financial burdens, however this will put further pressure on treasury and should be avoided. That said, fostering a culture of financial education at both institutional and individual levels is crucial to empower new homeowners with the knowledge needed to navigate tricky economic periods like we are in now.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
I've been very fortunate to not have clients calling me up to say they are struggling to pay their mortgage and I'm thankful for that. However, it's also not a huge surprise, as whilst a 7% increase is significant, it is a 7% increase on a very very small number when viewed across the entire UK mortgage market. Overall, borrowers have prioritised their mortgage repayments over other commitments and have maintained payments; some have had to work with their lenders (with or without the help of a broker) to look at things such as term extensions, or moving part of the mortgage onto an interest only basis, but they have maintained the payments. Lenders are always willing to help those who genuinely need their support, the last thing the lender wants is to have to repossess your home, so they will work with you to avoid that, as long as you are also prepared to work with them.
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Gary Bush
Financial Adviser at MortgageShop.com
It's a financial advisers duty to support their clients if they are having trouble with making their mortgage payments. For suitably qualified advisers with FCA permissions negotiating with existing financial organisations that the clients use is a good start - it's important to start this process early and prioritise their bill payments effectively and proportionately. This sudden interest rate shock, that the UK has been going through, has been on the cards for almost a decade - a ridiculously low bank base rate doesn't help keep inflation under control when obvious problems like Covid and the Ukraine war occur. It shouldn't come as any surprise to the UK government that billpayers are having problems in making the newly inflated mortgage payments, more emphasis in their public information program needs to focus on homeowners staying off the variable rate to at least temporarily delay a rate shock coming.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
I don't think further support is necessarily the answer, we just need to be better at sign-posting what is out there for people, and doing it earlier. For example, a well timed payment holidays could buy someone the time to sort themselves out without shooting their future borrowing costs through the roof by picking up arrears.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
We have a team member designated as our 'vulnerable person's policy champion.' We feel it's essential all firms have someone in place to address the needs of people in financial distress as this often goes hand-in-hand with mental health challenges. Lenders and the Government can still do more. Simply ensuring those in arrears are on the most favourable interest rate would do a lot to alleviate those short to medium cash-flow issues many are facing. Payment holidays and interest-only periods can help, but it must be based on there being a plan in place for the borrower's financial recovery.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
Lenders are still eager to lend. They are fighting constantly to be the cheapest at the moment, so they don’t seem too deterred.
Arrears may be up by 7%, but not to 7%. They are up from a very low base and still less than half of what we saw in 2009.
If unemployment increases, then I think lenders could get twitchy feet. There have only been two brief spells when unemployment has been lower than it is right now since 1975.
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Charles Breen
Founder at C B

When we arrange any clients mortgage we always tell them that as soon as they are beginning to struggle to contact your lender, speak to them and they will try to help, its in everyone’s best interests to help you when you are struggling, the worst thing to do is to bury your head in the sand.
As soon as the mortgage charter was announced we reached out to all our clients to inform them of what it meant for them, what it entitled them to and what they could do if they were struggling.
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Neezam Romjon
Co-Founder at Rebus Financial Services
This is a concerning time for anyone with a mortgage.

If you are struggling with your mortgage payments, the first thing to do is to speak with your mortgage lender.

It's the last thing many people want to do in that situation, but it really is the best thing for everyone . Lenders do have obligations to offer you support, for example the Mortgage Charter, and it's less damaging than burying your head in the sand.
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Austyn Johnson
Founder at Mortgages For Actors
Luckily I havent had any of these... However, I think the first port of call would be to have a quick chat, see if you can help with monthly budgeting and then if its not going to help,, advise them to approach their lender. Lenders can offer interest-only options, payment deferment and other help. the client will need to consider this all carefully through and take all the advice that is available to them