UK Mortgages in Serious Arrears Drop to Lowest Level in 7 Years

The Council of Mortgage Lenders has released new data that shows the proportion of UK mortgages in serious arrears has dropped considerably in recent months. The figures show that the first quarter of this year saw a drop in the number of mortgages in arrears in every band. Good news for the market and for homeowners In total there were 113,900 loans that were in some degree of arrears. Just 0.22% of all the mortgages in place today were noted as being in severe arrears during this three-month period. This means a mortgage that is in arrears at over 10% of the total mortgage balance. Just 24,400 mortgages fell into this bracket in the first quarter of 2015. This is the lowest figure seen since the closing months of 2008. Records began in this area at the beginning of that same year, so clearly this is good news. Far fewer properties being repossessed as well Another piece of good news to come from the data suggests there has been a steep drop in the number of possessions seen across the UK in recent months. The first quarter saw 3,100 properties being repossessed. This was 26% lower than the final quarter in 2014. Year-on-year the drop was even larger, at 52%. However this may not be a thoroughly-accurate picture of this part of the market. At present there is a legal case being argued in Northern Ireland involving the Bank of Scotland. This has led many lenders to put off making firm decisions about repossessions until the case has been resolved. Therefore there is a chance we may see a jump in these figures in the next few months. Continued improvement Even with a degree of uncertainty existing in that particular area, there has been continued improvement in the mortgage market as a whole in regard to arrears. For example when evaluating mortgages that had arrears of 2.5% of more of the loan value remaining, a proportion of 1.03% of the total mortgage market fell into this bracket in the first quarter. This is down slightly from the 1.03% seen in the last quarter of 2014. It is also significantly lower than the 1.24% seen in the first quarter of 2014, one year ago. The director general of the Council of Mortgage Lenders, Paul Smee, said we should not become complacent at these figures. He also said it was still very important to get in touch with your lender at the earliest opportunity if you are struggling with your payments. Lenders want to help you resolve them, he said. This is why the percentage of repossessions only account for a very tiny amount of the total number of mortgages that run into problems. The figures are clearly encouraging, especially as every area has seen improvements. This holds true for buy-to-let mortgages as well as those held by homeowners. It remains to be seen whether the case in Northern Ireland has an effect on future figures.

Published on 18 February 2020

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