UK Finance released its mortgage arrears and possessions data for Q4 2024, noting that the number of homeowner mortgages in arrears fell by 2% compared to the previous quarter, with a total of 92,170 mortgages in arrears.
In Q4 2024, buy-to-let (BTL) mortgages saw a decrease in arrears by 3%, totalling 12,610.
The proportion of mortgages in arrears remained low at 1.06% for homeowners and 0.65% for BTL mortgages.
In comparison, during Q1 2009, when arrears peaked, there were over 209,600 mortgages in arrears.
While possessions increased, the overall numbers remain low, with 1,730 homeowner and BTL properties repossessed in Q4 2024.
This figure is significantly lower than the 13,200 repossessions recorded in Q1 2009 and down 13% from the 1,990 repossessions in Q4 2019.
REACTION:
Charles Roe, director of mortgages at UK Finance:
“The number of mortgages in arrears has seen a slight decrease compared to the previous quarter.
“Having peaked in Q1 2023, arrears appear to now be on a confirmed downward trend.
“This reflects the fact that, while pressures remain, the challenges of higher interest rates and cost of living increases have begun to ease.
“This is good news for customers, but we know that this will not be the case across all households, and lenders will support anyone who might be struggling.
“Lenders offer a range of support to anyone worried about their finances.
“If you’re worried about your finances, please reach out to your lender as soon as possible to discuss the help available. Doing so won’t affect your credit score.”
Melanie Spencer, sales and growth lead at Target Group:
“Last quarter, the volume of arrears cases was falling and they’re still going in the right direction. With the UK set for a series of base rate cuts this year, borrowing pressures should ease.
“Increased government spending announced at the October budget should also drive growth supporting borrowers. Theoretically, cases should reduce.
“But we need to temper than with the news from the wider economy.
“RICS says housebuilders are doing less work than they were a few months ago. And the UK private sector economy expanded more slowly in last month as businesses laid off staff at the quickest rate since the 2008 global financial crisis.
“Rising unemployment will inevitably mean owner-occupiers and getting into arrears. Landlords aren’t immune from these shocks either – this week Grainger reported rents are rising at almost half the pace they were this time last year.
“This all points to borrowers needing more support from lenders. They will need the right systems in place to manage this process proactively, provide a much-needed resolutions for cases, and fall back on possessions only as a last resort.
“Early contact and remediation is essential to improve outcomes for all parties.”
Richard Pike, chief of sales and marketing at Phoebus Software:
“The latest figures from UK Finance show a decline in mortgage arrears in Q4 2024 across both homeowner and buy-to-let mortgages, which is encouraging and suggest that lenders’ support measures are having a positive impact.
“However, with cost-of-living pressures continuing to strain household finances, vulnerability and forbearance remain focus areas.
“Lenders should, where appropriate, be looking to automate customer engagement utilising advanced servicing software to concentrate on cases that require personal attention.
“As the economic landscape remains at best flat, maintaining control of arrears levels will be crucial.
“An interest rate cut this afternoon would provide much-needed relief for borrowers on variable rates.
“The effect of loosening of originations criteria by some lenders will take some time to flow through to portfolio performance.”
David Miller, divisional director at Spicerhaart Corporate Sales:
“We can be really encouraged by the fact that the number of arrears cases is decreasing, both on a quarterly and annual basis.
“While this is true for the lower arrears bands, numbers in the highest arrears band only continues to grow, which is likely to contribute to the rise in possessions.
“While perhaps with fewer options in terms of refinancing, they are certainly the ones that need the greatest support from lenders.
“Given the FCA’s recent communications with mortgage intermediaries, it’s abundantly clear that Consumer Duty remains their priority, along with minimising potential harm and poor outcomes – particularly for vulnerable customers.
“With all of financial services facing this same remit, it’s never been more important for lenders to have options in place to support clients in difficulty and deliver positive outcomes, with an assisted sale scheme being a clear example.
“As demonstrated in today’s figures with possessions still making up a small proportion of cases, lenders continue to do all they can to ensure that this is the last resort that it should be.
“We’re definitely seeing all the hard work of lenders helping customers that accept support and that is demonstrated in today’s figures.
“Part of this comes from robust forbearance measures, as well as the availability of good technology and intelligence, and the right partners in the market to help build a proactive strategy to support clients in difficulty and assess the value and any potential risk found in a lender’s portfolio.”
