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Cost of living crisis pushes up mortgage arrears but repossessions fall

Nick Cheek
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Nick Cheek

Homeowner mortgages in arrears of 2.5% of more of the outstanding balance came to 75,170 in the fourth quarter of 2022, up 1% on the same period last year.

In the last three months of 2022, there was a 1% rise quarter on quarter in those people behind on their mortgage payments, according to figures from UK Finance.

However, the research added that those who had significant arrears (10% or more of the outstanding balance) was two per cent lower than the previous quarter. There were 28,390 homeowner mortgages in more significant arrears.

The report continued that 6,060 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance, which is 5% more than the previous quarter.

Within the total, UK Finance said that there were 1,770 buy-to-let mortgages in more significant arrears of 10% or more of the outstanding balance. This was 1% less than the previous quarter.

A UK Finance spokesperson said: “The level of mortgages in arrears rose marginally at the end of last year as the increased cost of living weighed on households’ incomes. However, the increase is very small and the outright level is still lower than previous years.

“As the cost of living rises, customers may find themselves struggling with a range of bills including their mortgage. Lenders stand ready to help anyone who might be concerned about their repayments.

“If you’re struggling, don’t put it off — speak to your lender as early as possible as they will have a range of tailored options available to help and will work with you to find the best option for your individual circumstances.”

Repossessions drop by almost a third

The report added that 500 homeowner mortgage properties were taken into possession, which is 29% fewer than the previous quarter.

Around 320 buy-to-let mortgaged properties were taken into possession in Q4, which his 20% down on the previous quarter.

Matt Bartle, director of mortgages at Leeds Building Society, said: “Over the next 18 months, around 1.4 million borrowers will be coming off their current fixed rate deals and many will be facing an increase in their new monthly payments.

“That’s why it’s important that if any borrowers are experiencing financial problems, they should talk to their lender as soon as possible. Lenders can do several things to help borrowers, but the sooner they are aware of payment difficulties, the more options they have to help.”