Arrears and repossessions expected to rise this year
Speaking at the UK Finance annual mortgage lunch, Jackie Bennett noted that arrears were at a historic low in 2017 with 89,000 people with arrears balances of 2.5% or more of their outstanding mortgage.
However, she warned that the trade body is expecting those numbers to increase this year as some households come under pressure from base rate rises, while others will be affected by the changes in Support for Mortgage Interest (SMI).
Bennett highlighted that of the 90,000 eligible SMI claimants, the vast majority had not yet applied to convert their benefit into a loan.
“UK Finance has been coordinating efforts with lenders, debt advice charities and others to try to ensure recipients are made aware of the changes and take action. We have also been liaising closely with the government,” she said.
“Lenders have been contacting customers and discussing options with them for making up the payments if they do not want to take out the loan.
“However, that’s not an option for everyone and unfortunately some may fall into arrears. Repossession is always a last resort and we will continue to monitor the situation closely over the remainder of the year,” she added.
Long-term fixes and modest growth
Bennett also revealed that longer term fixes were becoming far more popular and that sustained modest growth was expected for the market.
“So far this year nearly half of new fixed rate business has been at five years or more, compared to around a third over the last few years.
“We expect gross lending to be around £260bn in 2018, the highest figure for a decade. And we expect that to grow modestly in 2019 too, to around £271bn.
“This is not back to the level of the heady days of the mid-2000s – which is probably a good thing,” she added.