The most recent data released by UK Finance reveals a slight increase in homeowner mortgages in arrears, with the number reaching 96,580 in the first quarter of 2024, marking a three per cent rise compared to the previous quarter. This upturn can be attributed to the ongoing impact of rising living costs and increased interest rates. Furthermore, the number of buy-to-let properties in arrears remained unchanged at 13,570 during the same period.
Despite these developments, the overall proportion of mortgages in arrears remains relatively low, standing at 1.11 per cent for homeowner mortgages and 0.69 per cent for buy-to-let mortgages. Additionally, there was a notable decrease in the number of homeowner and buy-to-let properties in early arrears, showing a two per cent and 11 per cent drop, respectively. This is indicative of both mortgages in the early arrears category transitioning into deeper arrears positions and a decline in new customers falling into this band.
It is important to note that the current figures pale in comparison to those during the peak of the global financial crisis in 2009, when homeowner and buy-to-let mortgages in arrears reached a staggering 209,600. This is nearly twice the 110,150 arrears recorded in the first quarter of 2024.
Meanwhile, while the percentage of mortgaged properties taken into possession has increased, this is largely due to older arrears cases making their way through the legal system. The total number of homeowner and buy-to-let mortgaged properties repossessed in the first quarter of 2024 stood at 1,470, which represents a 26 per cent drop from the 1,980 repossessions observed in Q1 2019, and an 89 per cent decrease from the peak of the previous possessions cycle during the financial crisis in Q1 2009, which saw 13,200 repossessions.
It is important to bear in mind that lenders make every effort to help customers keep their homes, and repossessing properties is always considered as a last resort after exhausting all other available options with the customer.
Upon delving into the specifics of mortgage figures, it was found that the number of homeowner mortgages in early arrears (constituting 2.5 to 5 per cent of the outstanding balance) decreased by two per cent compared to the previous quarter, while the number of buy-to-let mortgages in early arrears decreased by 11 per cent. In addition, a total of 870 homeowner mortgaged properties and 600 buy-to-let mortgaged properties were repossessed.
These latest figures demonstrate the ongoing impact of economic factors on mortgage arrears and repossessions in the UK, providing valuable insights for lenders, policymakers, and consumers alike as they navigate the ever-changing financial landscape.