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Mortgage holidays keep arrears low in Q2 – UK Finance

  • 13/08/2020
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Mortgage holidays keep arrears low in Q2 – UK Finance
Payment deferrals have helped keep mortgage arrears low in Q2 as homeowner figures dropped year-on-year and buy-to-let arrears saw a “relatively small” increase, data from UK Finance showed.


There were 73,580 homeowner mortgages in arrears of 2.5 per cent or more in the second quarter of the year and 22,840 with arrears exceeding 10 per cent or moreThis was down three per cent and two per cent respectively on the same period last year. 

Homeowner arrears increased in Q1 2020, likely due to the early effects of Covid-19 and have remained at similar levels in Q2 2020. UK Finance said this was lower than previous years. 

There were 5,000 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance, six per cent more than Q2 last year 

Within the total, there were 1,270 buy-to-let mortgages with significant arrears of 10 per cent or more of the outstanding balance. This was a five per cent increase on the same quarter of the previous year.  

This recent increase in buy-to-let arrears is relatively small, UK Finance said, as it was from a low base and is likely due to the early effects of the pandemic. Again, levels remained lower than previous years. 

There was also a decline in repossessed homes as 90 homeowner mortgaged properties and 130 buy-to-let mortgaged properties were taken into possession in the second quarter of 2020. 

Respectively, this was 93 per cent and 80 per cent fewer than the year before 

Following the ban on involuntary possessions, UK Finance said the low numbers reflected cases where the customer requested the possession to go ahead or where the property was vacant. 


Full extent of crisis on the horizon

Steve Seal, managing director at Bluestone Mortgages, said: “While on the surface, today’s figures may look promising, it is likely we will not see the full extent of the Covid-19 crisis on mortgage arrears until government support measures for homeowners end.  

“Once payment holidays end, however, it is likely that some homeowners, particularly those who have been financially impacted by the crisis, will struggle to keep up with their mortgage repayments – something which could affect their credit profile in the long run.


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