Yes, the Reeves budget may keep rates elevated, but fewer people are falling behind on repayments
The latest UK Finance report on mortgage arrears and possessions has been released and like the parson’s egg – it’s good in parts. Covering the third quarter of 2024, it - shows a slight improvement in arrears but a modest increase in repossessions for homeowner properties.
Here are the key highlights:
- Homeowner mortgage arrears: The number of homeowner mortgages in arrears (where arrears amount to 2.5% or more of the outstanding balance) stood at 93,630, marking a 3% reduction from the previous quarter. However, this represents an 8% increase compared to the same period last year.
- Buy-to-let mortgage arrears: The report shows that 13,000 buy-to-let mortgages were in arrears by at least 2.5% of the outstanding balance, a decrease of 4% from the previous quarter but up by 19% year-on-year.
- Arrears severity breakdown:
- Homeowner mortgages with arrears of 2.5% to 5% decreased by 5% quarter-on-quarter but remained stable year-on-year.
- For more severe arrears (10% or more of the balance), homeowner cases increased by 1% from the previous quarter and 13% over the past year.
- Buy-to-let mortgages in the most severe arrears category saw a significant rise, with arrears of 10% or more up by 11% from the last quarter and 54% year-on-year.
- Possessions:
- Homeowner possessions: The number of homeowner properties taken into possession rose slightly, up 1% from the previous quarter, with a total of 990 possessions in Q3 2024. This figure marks a 39% increase from the same period last year.
- Buy-to-let possessions: The number of buy-to-let properties taken into possession remained unchanged from the previous quarter at 710, but represents a notable 73% rise compared to Q3 2023.
UK Finance anticipates that the ongoing economic pressures may continue to impact the mortgage market - especially as mortgage interest rates remain elevated and cost-of-living challenges persist. The next update is scheduled for early February 2025, when the market will be reviewed in light of any new economic conditions.
