750 homeowner mortgaged properties were taken into possession in the first quarter of 2023, 50% greater than in the previous quarter in 2022, according to the latest data from UK Finance.
The latest figures revealed that there were 76,630 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2023.
This was 2% greater than in Q4 of 2022.
Within the total, there were 27,700 homeowner mortgages in the lightest arrears band (representing between 2.5% and 5% of the outstanding balance).
There were 7,030 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2023, marking a significant 16% increase on the previous quarter.
Within the total, there were 3,420 buy-to-let mortgages in the lightest arrears band – over 33.1% higher than the quarter before.
What’s more, 410 buy-to-let mortgaged properties were taken into possession in Q1, 28% more than in Q4 of last year.
Lee Hopley, director of economic insight and research, said: “The level of mortgages in arrears rose marginally in the first quarter of this year as the increased cost of living weighed on households’ incomes. However, the increase is small, and the outright level is still lower than previous years.
“While the number of repossessions increased, it’s important to note that this is from a very low base as historic cases make their way through the courts. The total number of possessions remains significantly below the levels seen prior to the pandemic.
“As the cost-of-living challenges persist, 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.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial, said: “This data will come as a crushing blow to the FCA and the Bank of England.
“If anyone was considering how the affordability stress tests worked, it is now abundantly clear they don’t when rates rise this quickly.
“Repossession is the final stage of a long process, and these rose by 50% over the quarter. This unfortunately means there is more bad news to come. Considering the menial effect of higher interest rates on the type of inflation we have, the Bank of England should be ashamed of itself for creating the misery we are seeing and the crisis that is developing.”
Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages, added: “This data does not make good reading. Some of this will be directly associated with higher mortgage rates, some will be the higher living costs that we are having to deal with.
“Mortgage lenders are legally obliged and genuinely wish to help borrowers who are in financial difficulty and can put a variety of plans together to help in the short term, such as interest-only or lengthening the term.
“A few of my clients with such challenges have been very pleased and surprised when they have spoken to their lender. None of us like to admit problems, but early action will make it much easier to remedy any situation. Don’t be afraid to speak with your adviser or lender if you are struggling.”
Bob Singh of Uxbridge-based mortgage broker, Chess Mortgages, said: “It’s no surprise that many families and landlords have succumbed to the relentless pressure of high costs of living and spiralling interest rates.
“With the Bank of England using its only tool of raising interest rates to control inflation, this is an unintended consequence of their actions placing further pressure on the Government purse to rehouse the affected parties at a time when rents are at an all-time high and supply is low.
“The message here for those struggling is to take advice and communicate with lenders, who are very reasonable under these circumstances and repossession is often a last resort for them.”
He added: “Many lenders are missing out on the opportunity to design products and policies to help these borrowers.
“As draconian as it may seem, how many lenders insist on income protection or life cover? Hardly any. This responsibility also falls on advisers to ensure the client takes out suitable redundancy/PHI cover to ensure the income continues.”
