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Mortgages

Just a fifth of homeowners in arrears have asked lender for help

Samantha Partington
Written By:
Samantha Partington
Posted:
Updated:
17/12/2022

Homeowners who have fallen behind on their mortgage repayments are suffering in silence instead of asking their lender for help.

Homeowners who have fallen behind on their mortgage payments are failing to ask their lenders for help, putting them at risk of repossession.

Only 20% of the 44,393 borrowers who are in arrears with their mortgage have agreed a payment arrangement with their lender such as a payment break or reduced payment.

This represents a 15-year low, according to audit and tax firm Mazars, despite the pressures borrowers face with rising interest rates, energy and food bills.

In 2008/09, the aftermath of the financial crisis, an average of 37% of borrowers who were behind on their mortgage repayments had an agreement in place with their lender. This means that a far larger proportion of borrowers in arrears today have no agreement in place with their lender than during the last financial crisis.

The total amount of mortgage debt in arrears has increased by 7% in the six months to June 30, from £388m to £415m.

If borrowers cannot keep up-to-date with their monthly payments and do not contact their lender to put a payment plan in place it could lead to the lender repossessing their home.

Chancellor Jeremy Hunt met with Nationwide, Virgin Money, Barclays, Santander, NatWest, Lloyd Banking Group and HSBC to discuss the actions that can be taken to support homeowners struggling to pay their mortgage.

Lenders said they would offer “tailored support” to those who start to struggle with payments, and while this would vary by lender it could include extending the mortgage term to lower monthly payments or accepting interest-only payments for a period.

Lenders also said they would ensure “highly trained and experienced staff” were on hand to help.

They also agreed to allow customers who are up-to-date with payments to switch to a new competitive mortgage deal without another affordability test and provide information to help customers plan ahead when their rate ends.

Paul Rouse, partner at Mazars, said: “If you’re falling behind with your mortgage payments, it’s really important to get in touch with your lender as soon as possible – which is why these figures are so worrying.

“Lenders are obliged to consider any request for payment flexibility and either agree or come up with an offer of their own. Talking to your lender can help provide you with a payment holiday or a temporary payment reduction, which could make all the difference between losing your home and keeping it.”

Related: Five options if you’re struggling with your mortgage payments.