Over 2.6 million mortgage payment deferrals have been approved to date, as a result of the coronavirus pandemic, according to UK Finance.
Moreover, 140,000 mortgage payment deferrals were still in place at the end of October.
The Mortgage Arrears and Possessions report outlined that there were 74,850 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2020. This figure represents a 5% increase on Q3 2019.
Within this total, there were 24,860 homeowner mortgages with more significant arrears, which relates to arrears of 10% or higher of the outstanding balance.
Arrears levels in 2020 remain close to the historically low levels of arrears we have seen in the last three years.
Furthermore, there were 5,400 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in Q3 2020, which is 19% higher than in Q3 2019.
Looking within this total, there were 1,350 BTL mortgages with more significant arrears, representing 10% or more of the outstanding balance.
However, BTL mortgages in arrears in Q3 2020 remains lower than previous years.
The data also outlined that 160 homeowner mortgaged properties and 230 BTL mortgaged properties were taken into possession in Q3 2020, 88% and 71% fewer, respectively, than in Q3 2019.
According to UK Finance, following the industry moratorium on involuntary possessions, these low possessions numbers in Q3 2020 for the most part reflect cases where the customer requested the possession to go ahead or where the property was vacant.
Jonathan Harris, managing director of mortgage broker Forensic Property Finance, said: “The number of homeowners in arrears remains close to historically low levels, which is not surprising as many borrowers continue to take advantage of mortgage payment deferrals.
“However, it is important that borrowers appreciate that it is not a payment holiday and that interest will continue to rack up, so it should only be taken if really required.
“The uptick of BTL mortgages in arrears is from a low base, with the overall picture suggesting current levels remain lower than in previous years. The past few months have been difficult for landlords, however, with evictions put on hold, and many may be tempted to sell up once they have an opportunity to do so.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added:” Mortgage arrears and possessions are always a key indicator of market strength as many will not be activated unless lenders believe there is a good chance of selling.
“Over the past year or so, lenders have been reluctant to enforce proceedings but mortgage holidays won’t last indefinitely and particularly if debts can’t be serviced.
“As a result, we are likely to see an increase in possessions and for that matter arrears as government support falls away, which will inevitably have an impact on housing supply and will help to keep rising prices in check.”