Number of homeowner mortgages in arrears drops 10% YoY

The total number of customers in arrears with their mortgages dropped 10% year-on-year, according to the latest data from UK Finance.

The data revealed that the number of mortgage customers in arrears totalled 74,540 at the end of June, with a reduction of approximately 200 compared to the previous quarter.

Within the total, there were 25,160 homeowner mortgages in early arrears, up 1% rise on the previous quarter.

UK Finance says this was the only segment that saw an increase in arrears numbers in Q2, but the number remains 14% fewer than the corresponding period in 2021.

Early arrears figures remain substantially lower than the numbers seen pre-pandemic. But that could potentially change in the near-term as pressure on household finances continues to grow.

In total, there were 28,840 homeowner mortgages with more significant arrears, 510 less than in Q1.

Meanwhile, there were 5,640 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in Q2 this year, down 4% quarter-on-quarter, and 10% down on the year.

Data also revealed that 630 homeowners mortgaged properties and 350 buy-to-let mortgaged properties were taken into possession in Q2 2022.

Reflecting on the latest UK Finance Mortgage Arrears and Possessions data, Vikki Jefferies, proposition director, PRIMIS, commented: “The data shows a further decrease in arrears in Q2 and figures still remain lower than pre-pandemic levels.

“We’ve also seen a small rise in the number of possessions, which has grown throughout the year as courts continue to work through the backlog of cases accumulated throughout the pandemic. As a result, it’s likely that these figures reflect borrowers in financial difficulty before the onset of Covid-19.

“However, it’s too early to note the effects that the rising cost of living and increased base rate will have on homeowners, which will surely have a real impact, particularly once the next energy price cap change comes into play later in the year. Amidst an increasingly complex market, advisers now have a real responsibility to step-up and support clients with tailored financial advice to mitigate the risk of falling into arrears further down the line.”

SOURCE: Property Industry Eye  | AUGUST 12, 2022 | MARC DA SILVA