The latest UK Finance arrears and possessions data showed a marginal decrease of less than 0.5% in homeowner mortgages in arrears Q2 2024.
The number of buy-to-let (BTL) properties in arrears increased marginally to 13,570, just over 0.5%.
However, the overall proportion of mortgages in arrears remained low, at 1.10% of homeowner mortgages and 0.69% of BTL mortgages.
Homeowner and BTL properties in early arrears fell by 3% and 6% respectively.
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 109,650 seen in the first quarter of this year.
Possessions numbers remained very low compared to historical norms; a total of 1,690 homeowner and BTL mortgaged properties were possessed in Q2 2024.
This was 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.
“However, we know that this will not be the case across all households, and lenders want to support anyone who might be struggling.
“Lenders offer a range of support to anyone worried about their finances.
“If you are worried about your finances, please reach out to your lender as soon as possible to discuss the support options available. Doing so won’t affect your credit score.”
Reaction:
Mel Spencer, sales and growth lead at Target Group:
“The rise in the number of possessions has continued an upward trajectory all year, with both homeowner and buy-to-let possessions on the rise.
“The biggest surprise may be the number of buy-to-let possessions up a whopping 51% year-on-year.
“The pressures on landlords and tenants have been increasing exponentially with rising mortgage rates and increasing tax pressures forcing many landlords to relay the costs down to tenants in increased rents.
“Today’s figures demonstrate that, for some, those pressures have just become far too much, but it is alarming as it will further decrease the supply of rental housing,
“A 31% year-on-year increase in homeowner possessions while still significant, looks modest in comparison with the buy-to-let percentages, although the real numbers are higher with almost 1000 people having lost their homes.
“The one positive is that while the number of arrears, compared to last year, are still up 51% for buy-to-let and 17% for homeowners, they have levelled off this quarter, hopefully reflecting the top of the curve and the start of a downward trend as inflationary pressures recede.”
Richard Pike, chief sales and marketing officer at Phoebus:
“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.”
