Arrears edge upwards - latest official figures from UK Finance

UK Finance’s latest arrears and possessions data shows a modest three per cent rise in homeowner mortgages in arrears to 96,580 in Q1 2024, compared with Q4 2023.

This was driven by the continued impact of cost of living pressures and higher interest rates.

The number of buy to let properties in arrears remained the same as the previous quarter at 13,570.

The overall proportion of mortgages in arrears remains low, at 1.11 per cent of homeowner mortgages and 0.69 per cent of BTL mortgages.

Homeowner and BTL properties in early arrears fell by two per cent and 11 per cent respectively.

In part, this reflects mortgages in this early band moving into deeper arrears positions. But it also points to fewer customers moving into this band and suggests we’ll see a limited increase in arrears cases for Q2 2024.

For comparison, the number of homeowner and BTL mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600 – almost twice the 110,150 seen in the first quarter of this year.

While the percentage of mortgaged properties taken into possession has risen, this is largely due to historic arrears cases now working through the court system.

Possessions numbers remain very low compared to historic norms.

A total of 1,470 homeowner and BTL mortgaged properties were possessed in Q1 2024. This is 26 per cent lower than the 1,980 seen in Q1 2019, before the pandemic, and 89 per cent lower than the 13,200 seen in Q1 2009 - the peak of the previous possessions cycle during the financial crisis.

Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort after other options have been explored with the customer.

In other detailed breakdowns of mortgage figures, the number of homeowner mortgages in early arrears (between 2.5 and five per cent of the outstanding balance) fell by two per cent compared to the previous quarter while the number of BTL mortgages in early arrears fell by 11 per cent. 

Some 870 homeowner mortgaged properties were taken into possession and 600 BTL mortgaged properties were taken into possession.