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Residential arrears at “historically low levels”: UKF

Residential mortgages in arrears continue to sit at “historically low levels,” shows new data from UK Finance.

During the second quarter of 2019 there were 75,890 residential mortgages in arrears of 2.5 per cent or more, which translates to 0.84 per cent of all outstanding mortgages of this type and is a 3 per cent drop on Q2 2018’s figure.

Of these mortgages, 31,280 topped out at 5 per cent of the balance being in arrears, while 23,370 were at 10 per cent or more – which is a 2 per cent drop on Q2 2018.

In terms of buy-to-let, 4,660 mortgages were in arrears of 2.5 per cent or more, which accounts for 0.24 per cent of all outstanding mortgages in this class and a 5 per cent increase on the same time frame as detailed above.

Arrears that top out at 5 per cent of the balance came in at 2,180 BTL mortgages, an 8 per cent rise, while those over 10 per cent of the balance rose 12 per cent, totalling 1,200 BTL mortgages.

Repossession numbers also grew, according to UK Finance. A total of 1,270 residential mortgages properties were repossessed, which is 15 per cent than in Q2 2018, while 2 per cent more BTL mortgaged properties met this fate – 590 in all.

Anderson Harris director Jonathan Harris says: “Encouragingly, there has been a fall in the number of homeowners in mortgage arrears compared with the same quarter last year… however, there is no room for complacency. While interest rates remain at low levels, there is plenty of economic uncertainty and there is always a chance they could rise.

“Borrowers must plan ahead and consider how they would cope if this were to happen. Long-term fixed-rate mortgages continue to be popular as they are competitively priced and enable borrowers to gain certainty and help with budgeting.”

Spicerhaart corporate sales managing director Mark Pilling comments: “[While] properties taken into possession has increased by 15 per cent… I don’t think this is necessarily the sign of a reversal in the trend.

“It is more likely, as UK Finance suggests, to be as a result of a backlog of historic cases which have been taken into possession in Q2.”

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