Good news as mortgage arrears plummet to record low

The housing market may have seen some depressing figures of late but there’s good news about mortgage arrears - they’re at their lowest ever.

Data released by UK Finance shows that in the first quarter of 2018 there were 78,800 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance.

That’s eight per cent fewer than in the same quarter of the previous year and the lowest level since records began in 1994.

Within the total, there were 24,100 homeowner mortgages with more significant arrears - that’s 10 per cent or more of the outstanding balance - but even this was three per cent down on the same quarter of the previous year.

There were 4,500 buy to let mortgages in arrears of 2.5 per cent or more; this was some six per cent fewer than in the same quarter of the previous year. Of these, some 1,100 landlords had more significant arrears of 10 per cent plus.

Only 1,200 homeowner mortgaged properties were taken into possession in the first quarter of 2018 - this is unchanged from the same quarter of the previous year.

“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” explains Jackie Bennett, director of mortgages at UK Finance. 

“However, the recent change to Support for Mortgage Interest 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” she cautions.

“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 Support for Mortgage Interest to see if there are other ways to make up their payments if they do not want to take out the loan” Bennett adds.