Copy article

Mortgage Arrears and Repossessions continue to increase

Journalist: Newsteam, Newsteam

ended 29. September 2023

The Money Charity's September money statistics report the following

Arrears and Repossessions
According to the Financial Conduct Authority, at the end of Q2 2023 there were 167,536 mortgage loan accounts with arrears of more than 1.5% of the current loan balance. This is 5.6% more than revised numbers for the previous quarter and 10.6% up on Q2 2022.
44.0% of payments due for loans in arrears were received in Q2 2023.
UK Finance reports that 81,900 (0.93%) of homeowner mortgages had arrears equivalent to at least 2.5% of the outstanding mortgage balance in Q2 2023, 6.9% up on the previous quarter.
Over the last year, mortgages in arrears have increased by 20.5 a day.
UK Finance estimates that there were 610 homeowner properties taken into possession in the UK in Q2 2023, no change from 610 in Q2 2022.
In England and Wales, in April to June 2023, according to the Ministry of Justice, every day 43.8 mortgage possession claims were issued and 8.6 mortgage possession orders were made. 247.7 landlord possession claims were issued and 62.2 landlord possession orders were made
every day. Compared to Q4 2019 (pre-lockdown), mortgage possession claims fell by 36.3% and orders by 76.6%, while landlord possession claims fell by 11.4% and landlord possession orders fell by 68.1%. This was due to forbearance action by the Government and the FCA in response to the
Covid-19 pandemic.
However, possession claims and orders increased in Q2 and Q3 2021 from the very low levels of mid-2020.

  • Are you seeing upward trends on mortgage arrears ?
  • Repossession numbers seem to be subdued, do you think the Mortgage Charter for consumers is staving off reposessions ?
  • Landlord possession claims have increased, why do you think this is ?

Be punchy with your comments

10 responses from the Newspage community

Copy all

Copy

Editor
Justin Moy
Managing Director at EHF Mortgages
These trends are certainly worrying for both borrowers and the markets generally, and we haven't seen the majority of borrowers move to higher rates yet - with around 1.5m still to see expensive deals between now and the end of 2024. the Mortgage Charter does give some assistance, arguably not enough for long enough, but in the short term it will help limit repossessions at least, and reduce some payments where needed. The long-term effect of these arrears and missed payments will shape the mortgage market for many years to come, and specialist lenders will unfortunately be popular, and necessary.
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Despite recent rate reductions, arrears are up 10% on the same period last year. This is only going to get worse as more and more households come off their historic low fixed rates into the new reality and those increased mortgage payments hitting on top of their already strained monthly budgets after the increase of every other outgoing already. These figures whilst not pretty are also not unexpected.
Copy

Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
You don't need to be a soothsayer to comment on these figures. With a rising interest market, this was always bound to happen. Some relief however is that repossessions have largely remained the same for 2022 and 2023, however arrears figures and more importantly possession claims for landlords has hugely increased. Where mortgage interest rates have increased, landlords have been caught between a rock and a hard place. Many are selling up unable to increase rents to match mortgage payments and many are evicting tenants - The Mortgage Charter for residential mortgages is one thing, offering a brief reprieve, and what the government needs to do is introduce something similar for the Buy To Let market, and protect Landlords and Renters alike, otherwise, possession claims will be the highest on record since the fallout of 2008
Copy

Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
The question is what happens when the mortgage charter ends? With property prices falling, lenders do not want to be sitting on defaulted loans which are becoming riskier. When the Charter ends and those properties make their way onto the market, that is when you will see a significant drop in house prices. All the Charter has done is delay the inevitable.
Copy

Editor
Simon Bridgland
Director at Charwin Private Clients
In my experience, I get to see a lot of enquiries from people on interest-only loans which are ending or have ended. Of these, roughly 15% are in arrears, with some not making any payments at all. An interesting thing I have found is that of those whose term has ended and who have maintained the interest-only payments, some lenders have seemed almost reluctant to take possession, if these clients are correct, some years after the term has officially ended. These clients have been receiving official demand letters but still they roll on without the lenders seeing to do anything more. These are for 'closed book' lenders, so perhaps they are happy to take the ongoing interest at the quite frankly eye-watering rates all the time it's paid on time. Does this mean the clients are on the precipice of possession and one missed payment will trigger court action, probably. So if the financial strain continues the numbers will undoubtedly get worse.
Copy

Editor
Bob Singh
Founder at Chess Mortgages
The Truss Tsunami is hitting the shores. With inflation ravaging the economy and stagnant wages for most, the shock of higher mortgage and loan payments is threatening most households.

The real effects are only beginning to surface as highlighted by these figures and the latent effects have yet to arrive. These will mean further arrears issues and more repossessions once the Charter runs out. These headwinds will contain any rapid recovery in the housing market and the Bank of England will have to slash rates to avoid a recession.

Lenders recovery departments will be gearing up for a busy 2024
Copy

Editor
Mike Staton
Director at Staton Mortgages
We shouldn't be surprised by these figures, with ever-increasing costs and high interest rates being painfully dragged out by the bank of England, it was inevitable that this was going to happen. We are now seeing the impact of Covid, with people searching for remortgages with defaults and arrears from 2 years ago whilst they were furloughed or made redundant in the pandemic, the cost of living crisis will have a similar knock-on effect, however, this will more than likely be more severe, with people defaulting on mortgage payments to put food on the table. More now needs to be done to help these homeowners who have worked hard to get themselves on the ladder, only to find their position on it jeopardized by decisions made by people who are not being impacted by the decisions they are making themselves
Copy

Premium
Denni Tyson
Mortgage and Protection Advisor at Henchurch Lane Financial Services
It's simple, the level of inflation is having a huge knock-on effect on household budgets. The largest outgoing for many households is their mortgage and with other costs going up, the level of income is being squeezed. For those that have significant jumps in mortgage rates, arrears will occur due to the lack of income available as a result of inflation.

The charter was a good step, but only for a short-term fix of 6 months. Repossessions are usually a 12-month process, so the next 6 months will be interesting if rates continue to fall.

In respect to landlord repossessions, rent is skyrocketing and demand for rental continues, there will be repossessions in many parts of the country with house stock needing to increase. But that stock can't be bought due to rates being so high? Something has got to give.
Copy

Adam Smith
Founder at Alfa Mortgages
While we haven't observed any clients falling into arrears, numerous individuals have faced challenges coping with the elevated repayment rates stemming from increased interest rates. Many have found it necessary to make adjustments to their lifestyles in order to manage their finances more effectively
Copy

Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Lenders appear to be showing some restraint on legal action. Given the range of alternatives they have to repossession that is to be welcomed. That said, we have seen more borrowers finding it challenging to make payments, particularly those who have come out of previously low fixed-rate deals onto significantly higher rates. Landlords facing tighter-than-ever profit margins are also suffering from more tenants unable to afford to pay because of the cost of living squeezing household budgets. Sadly for investors caught in this situation, there is little forbearance on the part of buy-to-let lenders and legal action can be all too swift. It's time more was done to help the sector or we'll likely see more landlords losing their properties with a knock-on effect for tenants losing their homes.