"While many households remain under pressure, the challenges of higher rates and the cost of living have begun to ease."
- Charles Roe, director of mortgages at UK Finance
UK Finance’s latest arrears and possessions data shows a slight decrease in the number of residential homeowners in arrears and fewer customers falling into early arrears.
The figures show a marginal decrease (less than 0.5%) in homeowner mortgages in arrears to 96,070 in Q2 2024, compared with Q1.
The number of buy-to-let properties in arrears showed a slight increase (just over 0.5%) compared with the previous quarter, to 13,570.
However, UK Finance says the overall proportion of mortgages in arrears remains low, at 1.10% of homeowner mortgages and 0.69% of buy-to-let mortgages.
In addition, homeowner and buy-to-let properties in early arrears fell by 3% and 6% respectively. This points to fewer customers falling into early arrears, but also partly reflects some customers previously in early arrears moving into more serious arrears shortfalls.
For comparison, the number of homeowner and buy-to-let mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600 – almost twice the 109,650 seen in the first quarter of this year.
Possessions
While the percentage of mortgaged properties taken into possession has risen - by 13% for buy-to-let and 8% for homeowner properties - UK Finance says this is largely due to the courts service increasing capacity to work through historic arrears cases.
Possessions numbers remain very low compared to historic norms. A total of 1,690 homeowner and buy-to-let mortgaged properties were possessed in Q2 2024. This is 15% lower than the 1,980 seen in Q4 2019, before the pandemic, and 87% lower than the 13,200 seen in Q1 2009 - the peak of the previous possessions cycle during the financial crisis.
Charles Roe, director of mortgages at UK Finance, said: “The number of mortgages in arrears has remained broadly flat compared to the previous quarter, which is good news following recent increases. This reflects the fact that while many households remain under pressure, the challenges of higher rates and the cost of living have begun to ease."
Richard Pike, chief sales and marketing officer at Phoebus, commented: “A 13% increase in possessions of buy-to-lets in the second quarter of 2024 might come as a blow to some. However, we can probably attribute a portion of this to the fallout from the previous high energy and general costs of living that have taken their toll on renters and landlords alike.
“Now that inflation and energy prices have dropped, and the market is so much more buoyant as we move through the second half of 2024, I would hope that the equivalent figures this time next year will look a lot more promising.
“The 8% increase on possessions of homeowner properties can be similarly explained. Gladly, Consumer Duty rules will have helped a lot of homeowners avoid falling into this group, as the handful of lenders who might not have been so understanding during times of financial hardship, are now obligated to help their borrowers as much as possible.”
