Homeowner mortgages in arrears increased by 7% to 93,680 in the fourth quarter of 2023 compared to the previous quarter
In line with market forecasts, the number of homeowner and BTL mortgages in arrears has increased, shows the latest data published by UK Finance on Thursday.
Homeowner mortgages in arrears increased by 7% to 93,680 in the fourth quarter of 2023 compared to the previous quarter, while buy-to-let mortgages in arrears rose 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, MD of personal finance at UK Finance.
The trade body’s mortgage arrears and possessions data for fourth quarter of 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 drops in mortgage rates could mitigate the financial burden for nearly 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 jump beyond the initial rates at the time of mortgage agreement.
Instances of property repossessions remain considerably low, with a total of 1,040 properties repossessed in the fourth quarter of 2023. This figure is notably less than the around 2,000 repossessions recorded in the same quarter of 2019, prior to the pandemic.
UK Finance stressed that property repossession should be considered a last resort, pursued only after all other options have been exhausted.
Nonetheless, 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 alternatives.