UK Finance: The number of mortgages in arrears drops

Michael Lloyd

November 14, 2019

The proportion of homeowner mortgages in arrears has fallen to remain at historically low levels, arrears and possessions data from UK Finance has showed.

There were 71,590 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in Q3, down 9% year-on-year.

Reportedly there were 22,300 homeowner mortgages with more significant arrears, representing 10% or more of the outstanding balance.

This figure was 8% less than in the same quarter in 2018.

Steve Seal, managing director at Bluestone Mortgages, said: “It’s encouraging to see that mortgage arrears remain at historically low levels, but there’s no room for complacency.

“Many borrowers are still struggling to meet their monthly repayments, perhaps as a result of an unexpected life event such as an illness or divorce.

“If a borrower misses just one regular payment, their credit score could suffer, impacting their eligibility for a remortgage on the high street.

“For many borrowers, fear of being rejected for a remortgage means that at the end of their term, they’ll tick over to their lender’s SVR.

“These higher rate products represent a bigger monthly expenditure for borrowers and further exacerbate their affordability problems – starting what in some cases becomes a vicious circle of financial hardship.”

There were 4,550 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in Q3, 5% fewer than in Q3 2018.

In regards to more significant arrears, there were 1,170 buy-to-let mortgages representing arrears that were 10% or more of the outstanding balance, down 1% year-on-year.

However, repossessions within the residential and buy-to-let markets had both risen.

This was driven in part by a backlog of historic cases which are being processed on the same basis as the latest regulatory requirements.

Some 1,330 homeowner mortgaged properties were taken into possession in Q3, 19% more than in the same quarter of the previous year.

Similarly, 800 buy-to-let mortgaged properties were repossessed in Q3, up 40% year-on-year.

Mark Pilling, managing director at Spicerhaart Corporate Sales, said: “Arrears remain low, but with weak retail performance and worsening economic data, it’s difficult to imagine this being sustained long into the new year.

“The mortgage possessions figures are concerning – up 19% year on year for homeowners, and 40% for buy to let.

“UK Finance are right to point out that this stems in part from historic cases but it is nonetheless a significant jump.

“The retail sector is hoping for a buoyant Christmas – let’s hope that for better news next quarter.”

Steve Seal added: “Better signposting for these consumers is crucial. They do have other options available to them – but the issue is one of awareness.

“Specialist lenders, for example, understand that mortgage arrears are often the result of a one-off event, and can provide borrowers with personalised solutions that take their unique circumstances into account.

“For borrowers who are concerned about their repayments or mortgage eligibility, speaking to an adviser can provide them with the lifeline they need.”


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