Loans with arrears representing more than 2.5% of the mortgage balance at the end of September represented 0.94% of the market, 14% lower than the same time last year. In total, 99,000 arrears were owner-occupied against 5,700 buy-to-let.
The number of loans in all arrears bands fell apart from the most serious band of 10% or more, increasing by 400 between the second and third quarters, which is a drop of 7% from last year.
Jonathan Harris (pictured), director of mortgage broker Anderson Harris, said: “The number of repossessions remains stable, while the number of borrowers in arrears continues to decline. This is to be expected with rock-bottom interest rates and improving figures as well as lenders prepared to be flexible and show forbearance.”
While figures are improving, he warns there is a risk that ‘recent inflation data which pushes out the timing of the first interest rate rise will encourage complacency among borrowers.’
Paul Smee, CML director general agreed: “Looking ahead, there is possibly a risk that people will postpone thinking about the prospect of higher payments as the timing of rate rises continues to stretch beyond previous expectations. […]”
Harris added: “It is vital that borrowers keep their lender in the loop if they are struggling with their mortgage. It is much easier and less stressful to come up with solutions early on than further down the line when the options may be more limited.”