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Mortgage arrears jump and possessions set to rise – UK Finance

  • 11/02/2021
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Mortgage arrears jump and possessions set to rise – UK Finance
Homeowner and buy-to-let mortgage arrears have risen quarterly but the number of borrowers behind on payments last year were still near historically low levels.


The UK Finance Arrears and Possessions figures for Q4 2020 showed the number of homeowners in significant mortgage arrears of 10 per cent or more of the outstanding balance rose 1,800 to 26,660 

UK Finance said this was driven by borrowers who were already behind in payments since before the pandemic but had already made full use of the six-month payment deferral. 

The total number of homeowner mortgages in arrears increased three per cent to 77,410 compared to the previous quarter. Annually, this was a nine per cent uptick. 

Buy-to-let mortgages in significant arrears of 10 per cent or more of the outstanding balance saw a quarterly increase of eight per cent to 1,460. 

Overall, there were 5,480 buy-to-let mortgage holders in arrears in Q4, up by a third from 2019. 

The majority of mortgage holders have continued to make payments on their loans, with just 130,000 borrowers deferring payments in December.  

This number has remained stable since October but is notably down from the peak in June where 1.8 million borrowers were on a mortgage payment holiday. 


Possessions set to rise 

A total of 2,660 properties were taken into possession last year, suppressed by the ban on involuntary repossessions until 1 April.  

UK Finance said the backlog on possessions which were not allowed to go ahead would result in more taking place this year. 

In the final quarter of 2020, 140 homeowner properties were taken into possession and 190 buy-to-let properties were seized by lenders. 

Eric Leenders, managing director of personal finance at UK Finance, said: “Whilst the data shows a relatively small increase in the total number of all arrears from the historic low levels seen in 2019, the support available from lenders has meant those who were not in financial difficulty at the beginning of the pandemic have remained out of arrears. 

“Despite the modest uptick, the total number of customers in the early stages of arrears in Q4 2020 remains below the level seen at the end of 2019.”  

“As Covid-19 continues to affect the economy, we anticipate there will be further increases in mortgage arrears during 2021.  

“Lenders continue to help customers experiencing financial difficulties with a package of support for those who need it, including payment deferrals and tailored assistance,” he added. 

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