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Mortgage Arrears Drop to Lowest Level since 1994, Reports UK Finance

Jess Goodridge - May 14, 2018

Mortgage arrears dropped to the lowest level since records began in 1994 in the first quarter (Q1) of the year, according to the latest Mortgage Arrears and Possessions Update from UK Finance.

The report found that 78,800 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance in Q1 2018, which is down by 8% on Q1 2017 and the lowest level ever recorded by UK Finance.

Within the total, there were 24,100 homeowner mortgages with more significant arrears (defined as 10% or more of the outstanding balance). This has dropped by 3% on an annual basis.

"Mortgage arrears dropped to the lowest level since records began in 1994 in the first quarter (Q1) of the year"

“Mortgage arrears dropped to the lowest level since records began in 1994 in the first quarter (Q1) of the year”

Buy-to-let

In Q1, 4,500 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance, which is down by 6% on the same quarter last year.

Within this total, there were 1,100 buy-to-let mortgages with more significant arrears.

Possessions

UK Finance’s latest study also revealed that 1,200 homeowner mortgaged properties were taken into possession in Q1 2018. This is unchanged from the same quarter of 2017.

Jackie Bennett, the Director of Mortgages at UK Finance, comments on the recent data: “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.”

She continues: “However, the recent change to Support for Mortgage Interest (SMI) 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.

“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 SMI to see if there are other ways to make up their payments if they do not want to take out the loan.”

She concludes: “As ever, customers should not hesitate to contact their lender if they anticipate any payment problems and want to discuss what options are available. Repossession is always a last resort.”

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