Mortgage arrears remain low

Buyer and seller confidence is strong despite financial uncertainty, says Vicky Shaw

The number of homeowners in arrears with their mortgage remained low in the first quarter of this year – but rising bills will increasingly have an impact on households’ budgets, a trade association has said.

Some 75,670 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance at the end of March, according to UK Finance.

This was nearly 4,000 fewer mortgages in arrears compared with three months earlier and also fewer than a year earlier.

Within the total, 29,340 homeowner mortgages were in arrears representing 10% or more of the outstanding balance.

This was 670 fewer than three months earlier – and the first decrease in arrears at this level since 2019.

Although it is too early to draw out a confirmed trend, this may reflect customers in long-term difficulties going on to sell their home or have it repossessed, UK Finance said.

Some 580 homeowner mortgaged properties and 370 buy-to-let mortgaged properties were repossessed in the first quarter of this year.

There were 240 more repossessions overall in the first quarter of 2022 compared with the previous quarter.

But the latest total is still less than half the total in the last three months of 2019, UK Finance said.

Eric Leenders, managing director of personal finance at UK Finance, said: “The number of customers in arrears remains low and fell for the fourth quarter in a row.

“The number of homeowner mortgages in arrears is now 10% lower than a year ago and buyto-let mortgage arrears are 5% lower for the same period.

“The first quarter arrears data is therefore largely positive, although energy price and national insurance rises in effect from April will increasingly affect household budgets throughout the rest of the year.

“In contrast, the fact that the majority of borrowers are on fixed rate mortgages means they are protected from increased borrowing costs should the base rate rise further.”

He added: “Lenders continue to provide tailored forbearance and support to borrowers who need help and will not look to put customers on a repayment plan that they cannot afford so anyone experiencing financial difficulty should contact their finance provider as soon as possible to discuss options available.”

And separate research also suggests that home buyer and seller confidence remains strong.

Home buyers and sellers remain confident about their prospects in the next few months, according to a property sentiment index, according to the research from property website OnTheMarket.

Just over three-quarters (76%) of active home buyers are confident of being able to buy a property within the next three months.

This was a slight increase when compared with 75% who felt this way in March.

And 82% of sellers are also confident about being able to complete a sale within three months, a percentage which was unchanged from the previous month.

Nearly two-thirds (63%) of properties were sold within 30 days of first being advertised for sale, according to the latest report, compared with 54% in April 2021.