UK Finance has recently published its latest findings on mortgage arrears and possessions for Q4 2023, providing insight into the impact of cost-of-living pressures and higher interest rates.
The data reveals a rise in arrears for both homeowner and buy-to-let (BTL) mortgages, in line with previously projected trends. This increase in arrears is attributed to the combined effects of cost-of-living pressures and higher interest rates. However, there is some positive news as mortgage rates have been decreasing in recent months, offering relief for the 1.5 million homeowners and 230,000 BTL mortgage holders whose fixed rate deals are due to expire this year.
Lender stress tests have played a role in ensuring that borrowers can continue to meet their mortgage payments despite rising interest rates. However, it is important to acknowledge that there are external factors beyond the control of lenders that can also impact customers’ ability to manage their mortgage payments. UK Finance urges individuals concerned about their financial situation to contact their mortgage lender at the earliest opportunity to explore available options for their circumstances.
Interestingly, the number of possessions remains relatively low, with a total of 1,040 properties being repossessed in Q4 2023 across both BTL and homeowner mortgaged properties. This represents a significant decrease from nearly 2,000 repossessions in Q4 2019 prior to the pandemic.
Eric Leenders, the Managing Director of Personal Finance at UK Finance, stressed the importance of seeking support from lenders, stating that “the number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost of living and high interest rates take their toll on households. Importantly, help is available to anyone worried about their finances – please reach out to your lender as soon as possible to discuss the support options available. Lenders have teams of trained experts ready to help. Contacting your lender to find out what support is available won’t affect your credit score.”
It is critical to note that any sharing, distribution, or republishing of the content without prior written authorization from UK Finance is considered a breach of their website terms of use.
In conclusion, while the increase in arrears is a cause for concern, it is reassuring to see the support and measures in place to assist mortgage holders during these challenging times. It is always best to seek help early, and by proactively reaching out to lenders, individuals can explore the available support options without negatively impacting their credit score.
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