The Courier & Advertiser (Angus and Dundee)
Squeezed budgets ‘may lead to arrears increase’
The number of homeowners who are severely behind with their mortgage payments edged up towards the end of last year, figures from a trade association show.
And, looking ahead, rising living costs and planned increases in National Insurance contributions are likely to squeeze household budgets further and put an upward pressure on arrears numbers, UK Finance said.
It also expects repossessions to increase this year as courts work through a backlog of cases.
Some 30,010 homeowner mortgages with significant arrears of 10% or more of the outstanding balance were recorded in the fourth quarter of 2021, according to UK Finance’s figures.
This was 350 more cases than the previous quarter and the total has been increasing since early 2020.
Many of these customers were in relatively deep arrears before the pandemic and are likely to have made use of coronavirus-related support schemes.
Customers facing financial difficulty are encouraged to contact their lender early, UK Finance said.
Overall, homeowner mortgage arrears were on a downward path as 2021 ended.
In total, 79,620 homeowner mortgages were in arrears of at least 2.5% of the outstanding balance at the end of December 2021 – 750 fewer than in the previous quarter, as well as being lower than the same period a year earlier.
Eric Leenders, managing director of personal finance at UK Finance, added: “Rate rises in response to inflation will lead to increased mortgage payments for some, though the majority of borrowers are currently on fixed rates.”