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There was a 3% drop in homeowner mortgages in arrears to 93,630 in Q3 2024, compared with Q2 2024, UK Finance’s latest arrears and possessions data shows.
The number of BTL mortgages in arrears fell 4% decrease compared with the previous quarter, to 13,000.
The overall proportion of mortgages in arrears remains low, at 1.08% of homeowner mortgages and 0.67% of BTL mortgages.
Homeowner and BTL mortgages in early arrears fell by 5% and 10% respectively. This points to fewer customers newly entering arrears and suggests a limited increase in total arrears cases in the next quarter, at most. However, the decrease also partly reflects some customers previously in lighter arrears positions seeing their positions worsen, moving into more serious arrears bands.
For comparison purposes, the number of homeowner and BTL mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600 – this is almost twice the number currently in arrears.
Possessions
Possessions numbers remain very low compared to historic norms. A total of 1,700 homeowner and BTL mortgaged properties were possessed in Q3 2024. This is 15 per cent lower than the 1,990 seen in Q4 2019, before the pandemic, and 87 per cent lower than the 13,200 seen in Q1 2009 – the peak of the previous possessions cycle during the financial crisis.
Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort after other options have been explored with the customer.
Lender support for borrowers
Lender stress tests have ensured borrowers are able to keep up with their mortgage payments, even if their interest rate increases above the rate in place when they first took out their mortgage.
However, other factors can also impact customers’ ability to manage their mortgage payments. Anyone worried about their mortgage payments should reach out to their lender at the earliest opportunity to discuss the options available for their circumstances.
Contacting your lender to find out what support is available will not impact your credit score.
Eric Leenders, managing director of personal finance at UK Finance, said: “The number of mortgages in arrears has seen a slight decrease compared to the previous quarter, which is good news following increases over the past year. This reflects the fact that, while many households remain under pressure, the challenges of higher rates and the cost of living have begun to ease.
“However, we know that this will not be the case across all households, and lenders want to support anyone who might be struggling. Lenders offer a range of support to anyone worried about their finances. Please reach out to your lender as soon as possible to discuss the help available if you have any concerns. Doing so won’t affect your credit score.”
Reflecting on the latest data, David Miller, divisional director at Spicerhaart Corporate Sales, said: “It’s really positive to see the number of arrears cases falling almost across the board. Not only is a great sign of lenders acting early to support cases, it demonstrates the positive changes we’ve seen in the market – helping borrowers access products at a better price.
“Of course, attention will be on those in the highest arrears band of 10% or more, the only band to see a quarterly increase. With refinancing not always an option and customer vulnerability a clear concern, the hope is that lenders are already engaging with this growing cohort of customers. While options can become more limited in these higher bands, there are opportunities for good outcomes still available, particularly through the likes of an assisted sale scheme.
“Even with 33,000 borrowers in the highest arrears band, it’s still encouraging to see that just a fraction of those are being repossessed. With the right technology and market partners, along with robust forbearance measures, it’s certainly possible for repossession to remain a last resort and for both the lender and the borrower to still secure a positive outcome.”
Richard Pike, chief sales and marketing officer at Phoebus Software, added: “These arrears and possessions figures are a very encouraging sign either that people are managing their finances better and coming to terms with slowing levels of inflation, or financial institutions are showing more forbearance in line with Consumer Duty and best customer outcomes. I suspect it’s a bit of both.
“These are a large improvement on the previous quarter’s figures, which saw an 8% increase on possessions of homeowner properties and a fairly high 13% increase in possessions of buy-to-lets. If we get a Base Rate cut later today, I think that the mortgage industry unusually, in recent times, will have another good reason to be positive in terms of both existing customer management and new business volumes.”