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UK Finance Arrears and Possessions stats Q4 23

ended 08. February 2024

UK Finance has just published its Q4 2023 Arrears and Possessions report (key points below). Newspage asked brokers for their views, bottom.

  • There were 93,680 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the fourth quarter of 2023, 7 per cent greater than in the previous quarter.
  • Within the total, there were 35,940 homeowner mortgages in the lightest arrears band  (representing between 2.5 and 5 per cent of the outstanding balance). This was 5 per cent greater 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 fourth quarter of 2023, 18 per cent greater than in the previous quarter.
  • Within the total, there were 6,800 buy-to-let mortgages in the lightest arrears band  (representing between 2.5 and 5 per cent of the outstanding balance). This was 8 per cent greater than in the previous quarter.
  • Mortgages in arrears accounted for 1.07 per cent of all homeowner mortgages outstanding, and 0.69 per cent of all buy-to-let mortgages outstanding in the fourth quarter of 2023.
  • 540 homeowner mortgaged properties were taken into possession in the fourth quarter of 2023, 14 per cent fewer than in the previous quarter.
  • 500 buy-to-let mortgaged properties were taken into possession in the fourth quarter of 2023, 11 per cent greater than in the previous quarter.

7 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The increase in arrears is a consequence of the higher interest rates mortgage holders are now facing. Many stretched mortgage affordability to the limits when rates were at all-time-lows and just aren't able to cope. It is a vicious circle of events, as mortgage arrears leave them with a massive black marks on their credit files for the next six years, denying them the everyday credit options that are required in modern living.
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Hannah Bashford
Director at Model Financial Solutions
These statistics will be a stark reminder of the financial stress homeowners and landlords are still under. There is always going to be a lag with this data as there has been the Mortgage Charter and people will have been using their savings to keep making their repayments but as those savings dry up or the end of the 6 months nears, people who are struggling may fall into arrears. We certainly haven’t seen the end of this and I fear there will be more to come.
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Ben Perks
Managing Director at Orchard Financial Advisers
You have to ask to what extent is this data being impacted by a combination of the the Mortgage Charter and lenders being more lenient given current economic circumstances? The amount of mortgage possession claims has increased, which indicates payment arrears are on the rise, which is no surprise at all in the current climate. Covid, the cost-of-living crisis and rising interest rates have all taken their toll on people's finances. The Mortgage Charter has given people options to reduce payment for 6 months, so the reposession figures may just be delayed. It will be interesting to watch these figures over the first quarter of 2024 to see what picture they start to paint, but that picture may not be pretty.
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Ken James
Director at Contractor Mortgage Services
When you consider the payment increases many mortgage holders are seeing with the new rates they have had to accept, in most cases double if not more than the rate they previously had, it's staggering that even more have not fallen into arrears. For the 93,680 households that are in arrears of more than 2.5% of their mortgage balances in the last quarter of 2023 as we headed into Christmas, this must have been a very painful time. The decisions that many are facing such as heating or eating or paying the mortgage or paying for the school dinners for the kids are decisions that none of us want to have to make. Landlords are not escaping this pain as renters struggle to keep up with increased rents, landlords are dipping deeper into their own reserves to fill gaps but how deep do these pockets go? Both homeowners and landlords are being sorely tested and this is the reason why many are falling into arrears. It's not a great statistic and it's one the goverment needs to improve.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Context is key when looking at statistics. After all, if one person was repossessed in 2022 and two people in 2023, that's a 100% increase. According to the FCA figures for 2023 the total UK mortgage debt is £1,654.3 billion. Finder's mortgage statistics show the average UK mortgage as £189,503. That means that the total number of mortgaged properties in the UK should be around 8.7 million homes. So, even with this increase only 1.23% of total UK mortgages are in arrears and from a macroeconomic viewpoint that's a tiny amount. With interest rates having increased from their ultra-low levels, I don't think anyone is surprised to see an upward tick in arrears as people's fixed rates end and they are seeing sharp increases in repayments. If you are struggling there are options though, so it's important to reach out for help as soon as you can see an issue arising, either to your lender or to a broker, to explore the steps you could take to avoid going into arrears.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
Whilst not surprising, the percentage changes quarter on quarter highlight exactly how real the cost of living crisis is to everyday people. I hope the government read beyond the headlines and actually see the impact their decisions are having on their public. Unless something is done to stimulate growth in real terms, and reduce inflation further, then I can only see these numbers growing sadly. A 99% mortgage is not a solution to this.
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Akhil Mair
Director at Our Mortgage Broker
The latest data from UK Finance is in and the numbers are grim: 93,680 homeowner mortgages are in arrears of 2.5% or more, up 7% from the previous quarter. Within that, 35,940 mortgages are in the lightest arrears band, a 5% increase. These figures, though not surprising, underscore the financial strain many homeowners face. As we confront these challenges head-on, let's remain proactive in offering tailored solutions and unwavering support to our clients, and the government should do the same.