"The number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost-of-living and high interest rates take their toll on households."
- Eric Leenders, managing director of personal finance at UK Finance
The latest data from UK Finance shows an increase in arrears for both homeowner and buy-to-let mortgages in Q4 2023, driven by the combined impact of cost-of-living pressures and higher interest rates.
Homeowner mortgages in arrears increased by 7% to 93,680 compared to the previous quarter, while buy-to-let mortgages in arrears increased by 18% to 13,570 compared to Q3.
540 homeowner mortgaged properties were taken into possession in Q4, down 14% on the previous quarter, however, 500 buy-to-let mortgaged properties were taken into possession in Q4, 11% greater than the previous quarter.
Across residential and buy-to-let mortgaged properties, a total of 1,040 were repossessed in Q4 2023, compared with nearly 2,000 in Q4 2019 before the pandemic.
1.5 million homeowner and 230,000 buy-to-let fixed rate deals are due to end this year, although UK Finance says that recent falls in mortgage rates will "help ease the payment shock".
Eric Leenders, managing director of personal finance at UK Finance, said: “The number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost-of-living and high interest rates take their toll on households."
Simon Webb, managing director of capital markets and finance at LiveMore, commented: “Consumer Duty is obviously working, as the number of homeowner-mortgaged properties taken into possession is down by a significant 14%. However, the report clearly demonstrates that consumers are still struggling to make ends meet, with nearly 100,000 homeowners unable to pay their mortgages.
“When we see figures like this, we need to be particularly mindful of our older generations who are trying to pay unusually high SVRs when in fact they could potentially get a new mortgage. We surveyed more than 2,000 homeowners aged 50 to 90 plus and discovered that only 4% of 50+ year olds thought they could get a mortgage, which is outrageous. Later life lenders continue to widen their remit of affordability and the types of property they’ll lend against. We lenders and brokers need to let homeowners know this before they end up in these stressful situations.”