UK Finance: Homeowner mortgages remains at historically low levels

Jake Carter

February 13, 2020

home sales

The proportion of homeowner mortgages remained at an historically low level in Q4 2019, according to data collected by UK Finance.

In the final quarter of 2019, there were 70,880 homeowner mortgages in arrears of 2.5% or more which is 9% fewer than in the same quarter in 2018.

Within the total, there were 21,770 homeowner mortgages with more significant arrears, representing 10% or more of the outstanding balance.

This figure also represents a 9% fall on the data collected in Q4 2018.

There were 1,330 homeowner mortgage properties taken into possession in the final quarter of last year, this is 17% higher than the figure noted in Q4 2018.

Turning to the number of buy-to-let (BTL) mortgages in arrears there were 7% fewer year-on-year, with a total of 4,390.

Within the total, there were 1,160 BTL mortgages in arrears exceeding 10% or more of the outstanding balance which represents a 3% fall on an annual basis.

The number of BTL mortgage properties taken into possession in Q4 2019 rose 20% year-on-year to 660.

Jeremy Leaf, north London estate agent, said: “These figures are interesting, but not particularly surprising in view of subdued market conditions for most of last year and well before that.

“However, as the market slowly recovers it would not be surprising to see lenders taking a more proactive stance when it comes to repossessions as they will see, like the rest of us, that not only can the property in question be sold but possibly at a better price than they would have anticipated previously.”

Steve Seal, managing director at Bluestone Mortgages, stated: “As the number of mortgages in arrears remains at an historic low, it is encouraging to see that the majority of borrowers are staying on top of their finances.

“However, many do still struggle to keep up with their monthly repayments.

“For borrowers who find themselves missing an installment as a result of a one-off event such as an illness or divorce, they may discover that they are no longer eligible for a remortgage on the high-street, despite the fact that, on the whole, their financial records are healthy.”

Mark Harris, chief executive at SPF Private Clients, added: “With interest rates so low, one would hope that the vast majority of borrowers are managing to pay their mortgages in full and on time each month.

“The number of homeowners in arrears remains at historically low levels, and although the number of homes being repossessed has risen, UK Finance points out that this is from a very low base.

“Thankfully, lenders continue to show forbearance and flexibility towards many borrowers who are struggling with their mortgages.

“But it is important for anyone finding themselves in this position to keep their lender in the loop and seek independent financial advice as early as possible.

“Mortgage prisoners – borrowers stuck on expensive deals because their financial circumstances have changed so they cannot remortgage to a cheaper product – are among those most likely to find themselves in financial difficulty.

“It is vital that lenders and the regulator work together to find a workable solution for these borrowers.”

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