Mortgage arrears hit new all-time low: UK Finance

Houses, house, property, monopolyMortgage arrears have hit a record low according to the latest quarterly figures from UK Finance.

In the first three months of 2018 just 78,000 homeowners had arrears of 2.5 per cent or more of their outstanding mortgage balance.

This is a decline of 8 per cent when compared to the same period last year, and the lowest level since 1994 – when this data started to be collated.

Within this group there were 24,100 with more significant arrears, worth 10 per cent of more of the outstanding mortgage balance. Again this figure is falling, and is 3 per cent lower when compared to the same quarter last year.

In total 1,200 homeowners properties were repossessed in the first three months of 2018. This figures is unchanged from the previous year.

The same pattern is also emerging in the buy-to-let market, despite the squeeze on landlords profits, through taxation and increased regulation.

According to UK Finance there were 4,500 buy-to-let mortgage in arrears, a 6 per cent fall on the previous year. Of these 1,100 mortgage were in more significant arrears, representing 10 per cent or more of the outstanding balance.

UK Finance’s director of mortgages Jackie Bennett says that these figures have been supported by the low interest rate environment, but she warns this may change.

However she adds: “The recent change to Support For Mortgage Interest (SMI) from a benefit to a loan, as well as potential pressure on households from a future base rate risk, risk causing a reversal of this trend as the year goes on.”

She pointed out that only a small minority of those eligible from the SMI loan have taken it up so far. She urged those who have previously received this benefit to contact their lender if they were concerned about meeting future mortgage payments.

Spicerhaart managing director of corporate sales Mark Pilling says: “It is encouraging to see that arrears are at an historic low.” But he agreed that the tide may change as interest rates rises, and those who have lost SMI payments struggle to with their ability to meet mortgage payments.

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