New figures from UK Finance (the financial trade association) show that mortgage arrears are at their lowest level in 23 years, when recording of this type of data began.
The study shows that in the second quarter of this year:
- the number of mortgages in arrears of 2.5% or more of the outstanding balance declined to 88,200;
- this total was 5% lower than in the first quarter (92,600) and amounted to 0.8% of the more than 11 million mortgages outstanding in the UK;
- the fall in the number of mortgages was across all arrears bands, including those with the highest levels of arrears;
- the number of mortgages with arrears of 10% or more of the outstanding balance totalled 25,20 - down 5% from 26,500 in the preceding quarter;
- the number of properties taken into possession also declined from 1,900 to 1,800 (accounting for 0.02% of all mortgages).
The rate of buy to let (BTL) arrears was lower than arrears in the owner-occupied sector. The buy to let repossession rate, however, was higher due to lenders extending a high level of forbearance to owner-occupiers to help them overcome any period of financial difficulty and stay in their homes wherever possible.
The majority of borrowers are managing their mortgage payments
Paul Smee, from UK Finance, said: “These figures show that the overwhelming majority of borrowers are managing their mortgage payments successfully, and many of those who have experienced some difficulty in the past are able to recover their financial position. The recent improvement in the number of mortgages with high levels of arrears is particularly welcome.
“Borrowers are being helped by low interest rates, but mortgage costs are certain to rise at some stage. It is important therefore for customers to plan ahead and consider how their finances would be affected in those circumstances. As ever, lenders will continue to help borrowers resolve any financial difficulty if possible, so customers should not hesitate to contact their lender if they anticipate any payment problems.”