Mortgage arrears drop by 10%

UK Finance has reported that the number of customers with mortgage arrears has dropped 10% year on year. The only area that was up was the early arrears customers by 1%.

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UK finance is a trade association for the Banking and Finance Sector representing over 300 firms in the UK. They regularly report on arrears figures.

The numbers

At the end of June 2022, the number of mortgage customers in arrears was 74.540. Down around 200 from the previous quarter.

Of the 74,540 there were 25,160 in the early arrears segment. This was the only segment that saw an increase of 1%. Although this is still 14% down on the same period from 2021.

On the BTL side of the data, 5,640 were in arrears of 2.5% or more of the outstanding mortgage balance. 4% less than the last quarter and 10% less for the year.

Repossessions were up slightly. 630 homeowners and 350 BTL properties were taken into possession for the period.

The latest numbers are best summed up as, ok. Whilst arrears are down, especially when compared to pre-pandemic. That is good whilst repossessions are slightly up which is not so good. Although it must be appreciated that courts are still working on a backlog created by COVID so it is likely that properties being repossessed now may well relate to customers who were already in difficulty prior to COVID.

The cost of living crisis

The effects on mortgage arrears and ultimately repossessions being driven by the cost of living crisis is yet to be known. That is not to say there is no impact, of course, there is. It is just not being seen in the data yet. However, there should be no doubt it is going to create a real impact and we will see it in the coming quarter's data.

Given the expectation in regard to the change in the energy price cap coming soon, it will very quickly become difficult for many. Paying the mortgage first should of course make sense to most, it is pointless paying gas and electricity if you miss the mortgage payments and lose the home. Try telling that to families and the elderly this winter.

I am rooting as many are for a mild Autumn/Winter in 2022!

Lee Wisener CeMAP, CeRER, CeFAP, CSME

Having worked in the mortgage industry for over 20 years I have always wanted to build a website dedicated to the subject. Also being a geek when it comes to the internet all I needed was time and I could both build the site from scratch and fill it with content. This is it!