View more on these topics

Arrears and repossessions fall, but brokers fear impact of rate rise

Mortgage arrears and repossessions continued to fall in the second quarter among both residential and buy-to-let borrowers, although the number of landlords with serious arrears rose slightly and brokers aired fears over the impact of the latest base rate rise.

The figures from UK Finance show that there were 76,740 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2018, 8 per cent lower than in the same quarter of the previous year.

Within the total, there were 23,190 homeowner mortgages with arrears representing 10 per cent or more of the outstanding balance. This was 4 per cent lower than in the same quarter of the previous year.

There were 4,440 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2018, 6 per cent lower than in the same quarter of the previous year.

Within the total, there were 1,080 buy-to-let mortgages with arrears representing 10 per cent or more of the outstanding balance. This was 2 per cent higher than in the same quarter of the previous year.

There were 1,060 repossessions of owner-occupied properties in the second quarter of 2018, 5 per cent lower than in the same quarter of the previous year.

Meanwhile 520 buy-to-let properties were repossessed, 24 per cent lower than in the same quarter of the previous year.

UK Finance director of mortgages Jackie Bennett says: “Arrears and possessions are at an all-time historic low since we first started collecting this data over 24 years ago.

“While this is positive, last week’s base rate rise coupled with the disappointing uptake of the Support for Mortgage Interest loan could see arrears creeping up in the coming months.”

Spicerhaart Corporate Sales managing director Mark Pilling says: “As much as arrears remain historically low, there is the danger that anyone on a tracker or standard variable rate mortgage would be looking at affordability now that interest rates have increased.

“The governor of the Bank of England has already suggested that this will not be the last rate rise this year, which is likely to put more pressure on some people.

“UK Finance recently announced that lenders have signed up to agree common standards, which will help existing borrowers on reversion rates who, because of stricter affordability criteria, are ineligible to move to an alternative product.

“However, there are currently over 150,000 mortgage prisoners, but these proposals will only help 10,000 people initially, which is a drop in the ocean.

He adds: “For the other 140,000 there is a real threat that, as wages stagnate and they remain on high interest rates, they will fall into arrears.

“Although it is good that some progress has been made, it is important for lenders and mortgage owners to now be looking at all the cases on their books and finding ways to help their clients out of this situation.”

Anderson Harris director Jonathan Harris says: “Mortgage arrears are at a record low, which is encouraging, but there is no room for complacency, particularly with interest rates rising this month.
“We suspect that when it comes to their finances there are many people who don’t have a buffer to tide them over should they get into difficulty.”

Recommended

Home-House-Money-Property-700x450.jpg

Second charge mortgage repossessions edge upwards

The number of second charge mortgage repossessions increased in the first three months of this year, although rates remain at historically low levels. Figures from the Finance and Leasing Association show that 46 properties were repossessed n the first quarter of 2018, after the borrower defaulted on a second charge mortgage. This is up from […]

Second charge repossessions down 10% in Q2: FLA

The number of second charge mortgage repossessions fell in the second quarter, down 10 per cent on the same period last year, Finance and Leasing Association figures have found. However, the number of repossessions in Q2 of this year was up on Q1, from 17 to 36. The annual rate of second charge mortgage repossessions […]

Second charge mortgage repossessions down 50% in Q1

The number of second-charge mortgage repossessions in Q1 2017 was 17, down by 50 per cent on the same period of 2016, according to the Finance & Leasing Association. FLA head of consumer and mortgage finance Fiona Hoyle says: “The number of second-charge mortgage repossessions fell again in the first three months of this year, as lenders […]

Newsletter

News and expert analysis straight to your inbox

Sign up