Number of repossessions has also increased
The number of customers in arrears with their mortgages rose marginally at the end of last year as the increased cost-of-living weighed on households’ incomes, a report from UK Finance has revealed.
The trade body’s latest arrears and possessions data showed that there were 75,170 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the fourth quarter of 2022.
UK Finance noted that this is 1% greater than in the previous quarter, though the increase is very low and the outright level is still lower than previous years.
Of the total number of homeowner mortgages in arrears during Q4, there were 28,390 homeowner mortgages with more significant arrears – relating to 10% or more of the outstanding balance.
Meanwhile, there were 6,060 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the fourth quarter of 2022, 5% greater than in the previous quarter. Of these, 1,770 were with more significant arrears representing 10% or more of the outstanding balance.
UK Finance also reported that there were 500 homeowner mortgaged properties that were taken into possession in the fourth quarter of 2022, which was 29% fewer than in Q3. There were also 320 buy-to-let mortgaged properties that were taken into possession, which was 20% fewer than in the previous quarter.
“While the number of repossessions increased, it’s important to note that this is from a very low base as historic cases make their way through the courts,” it stated in its report. “The total number of possessions remain significantly below the levels seen prior to the pandemic.
“As the cost-of-living rises, customers may find themselves struggling with a range of bills including their mortgage. Lenders stand ready to help anyone who might be concerned about their repayments.”
UK Finance advised struggling homeowners to speak to their lender as early as possible to find the best option that will work for their individual circumstances.
Matt Bartle, director of mortgages at Leeds Building Society, echoed the importance of speaking with lenders, considering that over the next 18 months, around 1.4 million borrowers will be coming off their current fixed rate deals and many will be facing an increase in their new monthly payments.
“That’s why it’s important that if any borrowers are experiencing financial problems, they should talk to their lender as soon as possible,” he said. “Lenders can do several things to help borrowers, but the sooner they are aware of payment difficulties, the more options they have to help.”
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