Copy article

UK Finance mortgage arrears and repossessions: "lenders keep repeating the same mistakes"

ended 08. August 2024

Industry body, UK Finance, has this morning published its latest data on arrears and possessions. Among other things, it showed there were 96,070 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2024, broadly unchanged from the previous quarter. Additionally, there were 34,420 homeowner mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 3 per cent fewer than in the previous quarter. There were 13,570 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2024, 1 per cent greater than in the previous quarter. Newspage asked brokers and debt specialists for their views, below.

5 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Michelle Lawson
Director at Lawson Financial
There is some good news in these figures in that the residential homeowner figures have stabilised with the lightest arrears decreasing. The telling news is the arrears increasing on buy-to-let properties, which reflects the relentless pressure on landlords and the downtrodden private rental sector. This Government really needs to get a grip, and quickly, on the housing crisis for the most vulnerable in society. Not doing so will decrease stock, increase demand on lower supply and push rents up further. Private landlords should be seen as part of the solution and not the problem.
Star Quote
Copy

Patricia McGirr
Founder at Repossession Rescue Network
A significant number of UK borrowers have hit a financial iceberg over the past few years and, sadly, there aren't enough lifeboats for those that have gone overboard. If people already struggling with historically low interest rates couldn't keep afloat before, they're certainly going to feel the icy waters when they remortgage. The fact is, lenders keep repeating the same mistakes. If your credit is good, you can exect better rates, but at a time when every penny counts, you're penalised based on risk. Although rates have dropped a little recently, we need a more joined up approach to mortgage arrears and alternatives to repossession. I shudder at the mental health crises that lies behind these figures. The increase in buy-to-let repossessions can easily be attributed to the cost of living crisis, causing rent arrears. It's not helped by rent policy that drags out a landlord's ability to take back their property or to get rent back on track.
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Homeowner arrears are unchanged over the past quarter but a lot of households remain in a precarious position. The mortgage rate reductions we've seen over the past month or so are sadly too little too late for many households. There is the potential for more borrowers to sink into arrears when they have exhausted their personal borrowing. Crucially, with many borrowers still to come off their ultra-low fixed rate mortgages into the new normal, things will continue to get worse on arrears before the corner is turned.
Copy

Editor
Simon Bridgland
Director at Charwin Private Clients
There remains a lot of financial stress out there, as many borrowers are unable to benefit from the recent base rate drop. In particular, we are seeing borrowers who, while nearing retirement, are battling with their existing lenders, many of which are closed book lenders, so won't offer any new rates to help them out. People are often trapped and unable to do anything apart from sell up. The lucky ones can swap lenders to help take away the pressure they feel, but borrowers who bare the scars of late payments on mortgages or other credit can find they are stuck, facing an awful choice. Borrowers struggling with payments should contact their lender and see if they can take a break under the mortgage charter to help reduce payments for a 6-month period and try to down pay any other personal credit they may be juggling. Lenders not subscribing to the Mortgage Charter are generally not showing mercy.
Copy

Editor
Ben Perks
Managing Director at Orchard Financial Advisers
It's hardly worth celebrating, but a plateau in residential arrears is encouraging. Hopefully, as rates improve over the next quarter we will see these figures start to reduce. But away from the figures, the reality is that the amount of people struggling has not changed over the past two quarters and this is something that needs to be addressed. It's unsurprising to see an increase in buy-to-let arrears as landlords are being hammered from all corners, and this is likely to worsen.