But number of homeowner-mortgaged properties taken into possession down by 14%
In line with market forecasts, the number of homeowner and buy-to-let mortgages in arrears has increased, according to the latest data published by UK Finance on Thursday.
Homeowner mortgages in arrears rose by 7% to 93,680 in the fourth quarter of 2023 compared to the previous quarter, while buy-to-let mortgages in arrears increased by 18% to 13,570 during the same period.
“The number of mortgage holders in arrears, while still low, is continuing to rise as the cost-of-living and high interest rates take their toll on households,” said Eric Leenders, managing director of personal finance at UK Finance.
The trade body’s mortgage arrears and possessions data for Q4 2023 also revealed that there were 540 homeowner-mortgaged properties taken into possession, down 14% on the previous quarter.
There were also 500 BTL mortgaged properties taken into possession in the last quarter of 2023, up 11% on the previous quarter.
UK Finance, however, pointed out that recent decreases in mortgage rates could mitigate the financial burden for approximately 1.5 million homeowners and 230,000 BTL mortgage holders facing the expiration of their fixed rate deals this year.
It added that lender-implemented stress tests have also played a crucial role in ensuring borrowers can sustain their mortgage repayments, even as interest rates climb beyond the initial rates at the time of mortgage agreement.
Instances of property repossessions remain significantly low, with a total of 1,040 properties repossessed in the fourth quarter of 2023. This figure is notably less than the nearly 2,000 repossessions recorded in the same quarter of 2019, prior to the pandemic.
UK Finance emphasised that property repossession should be considered a last resort, pursued only after all other alternatives have been exhausted.
Nevertheless, the trade association for the UK banking and financial services sector acknowledged that external factors beyond lenders’ control may affect customers’ ability to manage their payments. It advised borrowers concerned about their financial situation to contact their mortgage lender promptly to explore available options.
“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,” Leenders said. “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.”
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