Mortgage arrears at lowest levels since 1994

Mortgage arrears have hit the lowest level since 1994, according to recent data published by UK Finance for the third quarter of 2017.

Mortgage arrears at lowest levels since 1994

The number of mortgages in arrears of 2.5 percent or more of the outstanding balance fell in third quarter, compared to the previous quarter.

At 88,300, the number of loans in arrears were two percent lower than in the second quarter of the year (90,400) and at its lowest level since this data was first recorded in 1994.

The number of mortgages in arrears fell across all bands, apart from those owing 10 percent or more of the outstanding balance. 

A total of 83,300 owners-occupiers were in arrears of 2.5 percent or more of the balance, down two percent from 85,300 in the second quarter. 

Buy-to-let arrears were flat, apart from a small increase in those with higher levels of debt.  Overall, the number of buy-to-let mortgages in arrears increased by two percent to 5,100 (5,000 in the second quarter).

The Ministry of Justice (MoJ) also published data for the third quarter of 2017, this time for mortgage and landlord possession statistics.

Compared to the same period in 2016, the number of mortgage possession claims and orders made in county courts increased, and warrants and repossessions have fallen.

Compared to the same quarter last year, mortgage possession claims increased six percent to 4,757 and orders for possessions increased 26 percent to 3,376.

Landlord possession claims, orders for possessions, warrants of possessions and repossessions by county court bailiffs have decreased for the third quarter of 2017.

Compared to the same quarter last year, landlord possession claims and orders for possessions decreased slightly. Both warrants of possessions and repossessions by county court bailiffs decreased by around ten percent – to 16,935 and 8,806 respectively.

The majority, 62 percent, of landlord possession claims were social landlord claims, 22 percent were accelerated claims and 16 percent were private landlord claims

June Deasy, head of mortgages policy at UK Finance, said: “Even a small rise in mortgage possessions is disappointing but, after a long period of declining numbers, it was inevitable that they would rise again at some stage.  Both arrears and possessions remain low by historical standards and look set to be lower for the year than we predicted at the start of 2017.”

Mark Pilling, managing director of Spicerhaart Corporate Sales, which offers repossession services and asset management to corporate clients, said: “As interest rates start to rise, wage growth remains stagnant, and we have inflation at 3 percent, now is the time for lenders to be keeping a close eye on their clients’ ability to keep up their repayments and engage with third parties to look after every borrower’s best interests.”