Mortgages

Repossessions up 19% in Q3: UK Finance

800 buy-to-let mortgaged properties were taken into possession in the quarter, an annual rise of 40%.

Rozi Jones
|
14th November 2019
house mortgage late payment due repossession arrears
"UK Finance are right to point out that this stems in part from historic cases but it is nonetheless a significant jump."

1,330 mortgaged properties were taken into possession in Q3, 19% higher than the same quarter in 2018, according to new UK Finance figures.

Additionally, 800 buy-to-let mortgaged properties were taken into possession in the quarter, an annual rise of 40%.

UK Finance says the increase in possessions has been driven in part by a backlog of historic cases, and remains below levels seen between 2009 and 2014.

The data shows that the proportion of homeowner mortgages in arrears remains at historically low levels, with 71,590 - 0.79% of all residential mortgages - in arrears of over 2.5%, 9% fewer than in 2018.

Within this total, there were 22,300 homeowner mortgages with more significant arrears of over 10% of the outstanding balance, 8% fewer than in the same quarter of 2018.

There were 4,550 buy-to-let mortgages (0.23% of all buy-to-let mortgages outstanding) in arrears of 2.5% or more, 5% fewer than in Q3 2018 and 1,170 buy-to-let mortgages with of over 10%, a 1% annual fall.

Additional figures released today by the Finance and Leasing Association show that the number of second charge mortgage repossessions in Q3 2019 was 25, 30.1% lower than in the third quarter of 2018.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The second charge mortgage market has reported lower levels of repossessions in each quarter so far in 2019. We expect the market to report a record low total for the year as a whole."

Steve Seal, managing director at Bluestone Mortgages, commented: “It’s encouraging to see that mortgage arrears remain at historically low levels, but there’s no room for complacency. Many borrowers are still struggling to meet their monthly repayments, perhaps as a result of an unexpected life event such as an illness or divorce.

“For many borrowers, fear of being rejected for a remortgage means that at the end of their term, they’ll tick over to their lender’s SVR. These higher rate products represent a bigger monthly expenditure for borrowers and further exacerbate their affordability problems – starting what in some cases becomes a vicious circle of financial hardship."

Mark Pilling, managing director of Spicerhaart Corporate Sales, added: “Arrears remain low, but with weak retail performance and worsening economic data, it’s difficult to imagine this being sustained long into the new year.

“The mortgage possessions figures are concerning – up 19% year on year for homeowners, and 40% for buy to let. UK Finance are right to point out that this stems in part from historic cases but it is nonetheless a significant jump."

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