Mortgage arrears at record low

Mortgages in arrears of 2.5 percent or more of the outstanding balance were at the lowest level since records began, in 1994, for Q1 2018.

Mortgage arrears at record low

The super trade body UK Finance has published its latest mortgage arrears and possessions statistics for the first quarter of 2018 and found that:

  • There were 78,800 homeowner mortgages in arrears of 2.5 percent or more of the outstanding balance in the first quarter of 2018, eight percent fewer than in the same quarter of the previous year.
  • Within the total, there were 24,100 homeowner mortgages with more significant arrears (representing 10 percent or more of the outstanding balance). This was three percent fewer than in the same quarter of the previous year.
  • There were 4,500 buy-to-let mortgages in arrears of 2.5 percent or more of the outstanding balance in the first quarter of 2018, six percent fewer than in the same quarter of the previous year.
  • Within the total, there were 1,100 buy-to-let mortgages with more significant arrears (representing 10 per cent or more of the outstanding balance).
  • There were 1,200 homeowner mortgaged properties taken into possession in the first quarter of 2018, unchanged from the same quarter of the previous year.

Jackie Bennett, director of mortgages at UK Finance, said: “The number of mortgages in arrears is at its lowest level since records began while possessions remain at a historic low.

“This has been helped by low interest rates and lenders supporting borrowers through periods of temporary financial difficulty wherever possible.

“However, 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 rise, risk causing a reversal of this trend as the year goes on.

“Only a small minority of those eligible for the SMI loan have taken it up so far. Lenders will proactively help borrowers in receipt of SMI to see if there are other ways to make up their payments if they do not want to take out the loan.”

Mark Pilling, managing director of Spicerhaart Corporate Sales, said that although levels of mortgage arrears are at a record low, we could now see things start to shift: “Many of those who took out interest-only mortgages are coming to the end of their terms with no way of paying off the capital. And with house prices falling in many regions, they will find they have less equity in their homes than they had hoped. This could cause problems as they try to sell or remortgage to pay off the debt.”