"The rise in homeowner possessions is perhaps an early indicator of things to come"
The total number of customers in arrears with their mortgages continued to fall in the second quarter of 2022, the latest data from trade body UK Finance has shown.
According to its mortgage arrears and possessions data for Q2 2022, there were 74,540 homeowner mortgages in arrears at the end of June 2022, a reduction of approximately 200 homeowner mortgages compared with the previous quarter. This is also 10% fewer than in the same period of the previous year.
From April to June, 630 homeowner mortgaged properties and 350 buy-to-let mortgaged properties were taken into possession. The number of buy-to-let mortgage possessions fell by 8% compared with the previous quarter, while the number of homeowner mortgage possessions rose by 5%.
There were 530 more possessions in Q2 2022 compared with the same period last year. However, this figure is around half the number seen in pre-pandemic Q2 2019.
UK Finance pointed out that year-on-year comparisons for possessions will look unusually large due to greatly suppressed activity in Q2 2021 as the courts and the industry slowly resumed activity following the end of the possession moratorium.
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Richard Pike, sales and marketing director at Phoebus Software Limited, said that while the latest figures show a fall in arrears in Q2, the underlying data is pointing to a shift as the pressures from rising interest rates and inflation take hold.
“The rise in homeowner possessions, of 5% on Q1, is perhaps an early indicator of things to come,” Pike added. “The prediction that household energy bills are likely to average £350 per month by January next year is something that, added to the rising cost of mortgages, will put immense pressure on many households.
“Now is the time for borrowers and lenders to be talking to each other and looking at ways to try to manage potential arrears or defaults. It’s not a terrible picture at the moment, but unfortunately there will be some that find themselves in a difficult position over the next six to 12 months, unless things change dramatically.”
Emma Hollingworth, distribution director at MPowered Mortgages, said that although there has been a slight rise in possessions, these figures are still way below pre-COVID levels, which were themselves low.
“While numbers remain low, it is important to note that some borrowers may be facing financial difficulty at this time, due in part to the ongoing cost-of-living crisis, and lenders play a vital role in supporting customers in these situations,” Hollingworth stated. “Part of this is ensuring that affordability checks are carried out accurately and efficiently as part of the mortgage application process.”
