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Government support cushions mortgage arrears in Q3

  • 11/11/2021
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Government support cushions mortgage arrears in Q3
Mortgage arrears fell to near historic lows in Q3 as household incomes continued to be supported by the Coronavirus Job Retention Scheme (CJRS) up until September.


According to the UK Finance arrears and possessions figures, the number of homeowner mortgages in arrears dropped by three per cent to 74,210 while buy-to-let mortgages fell by six per cent to 5,670. 

Within the homeowner arrears, 25,110 were in early arrears of 2.5 to five per cent of the outstanding balance. This was a decline of five per cent on the previous quarter and 10 per cent down year-on-year. 

UK Finance said early arrears were lower than pre-pandemic levels and although Covid-specific support schemes had ended, continued forbearance provided by lenders would moderate but not prevent a rise. 

Also within the total was 27,980 homeowner mortgages which were in significant arrears of 10 per cent or more of the outstanding balance. Compared to Q2, this was up by 70 cases. 

UK Finance said borrowers who were already significantly behind on payments before the pandemic would have made use of the support available to catch up, helping to keep the overall figure low. 

There were 410 homeowner mortgaged properties and 320 buy-to-let mortgaged properties taken into possession in Q3.  

Although this represented quarterly increases of 95 per cent and 39 per cent respectively, UK Finance noted this was only a surge because of the moratorium put on possessions between March 2020 and April this year.  

It said the number of possessions would gradually increase as the courts continue to work through the backlog of cases.  

Eric Leenders, managing director of personal finance at UK Finance, said: “Mortgage arrears continued to fall to near historic lows during the third quarter of the year, with the furlough scheme and the previous mortgage payment deferral scheme supporting people and even enabling some to pay down existing arrears. 

“Following the end of the year-long moratorium on possessions in April 2021, there were a small number of possessions in Q3, however these reflected cases where people were already in financial difficulty before the pandemic.” 

He added: “Possession is only ever a last resort after tailored support is exhausted and we expect to see a gradual increase in cases as the courts continue to process those which had been put on hold.” 

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