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Resi arrears stable but BTL arrears grow slightly – UK Finance

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  • 10/11/2022
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Resi arrears stable but BTL arrears grow slightly – UK Finance
Homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance came to 74,440, one per cent down on the same period last year.

According to UK Finance, this is down from 74,450 homeowner mortgages in arrears with 2.5 per cent or more of the outstanding balance in Q2.

This continues a trend of arrears falling since the start of the year, with the 2.5 per cent arrears figure in Q1 pegged at 75,670.

UK Finance said that within the total there were 28,910 homeowner mortgages with more significant arrears of 10 per cent or more of the outstanding balance. This was in line with the previous quarter.

Some 700 homeowner mortgaged properties were taken into possession in Q3 2022, which is up by 15 per cent in the previous quarter and 20 per cent up from Q1.

 

Buy-to-let arrears and possessions grow slightly

UK Finance said that there were 5,760 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in Q3 202, which is around two per cent more on Q2 but two per cent down on Q1.

There were 1,780 buy-to-let mortgages with more significant arrears, which is 10 per cent or more of the outstanding balance, which is one per cent down than the previous quarter.

It is also in line with Q1 with 1,760 buy-to-let mortgages with significant arrears.

Some 390 buy-to-let mortgaged properties were taken into possession, which is 11 per cent more than in the previous quarter. It also compares to 370 of buy-to-let mortgaged properties in Q1.

 

‘It is only right to expect that the number of borrowers in arrears is going to increase’

Richard Pike, Phoebus Software chief sales and marketing officer, said that although the figures showed “very little change” from the previous quarter the “underlying number with more significant arrears is the figure that lenders should be watching”.

He continued: “Forbearance during, and since, Covid has meant that lenders have had to change their processes and as such allow more significant arrears to build. With inflation and interest rates rising it is only right to expect that the number of borrowers in arrears is going to increase.

“Unfortunately, during the period of forbearance lenders didn’t have the need for large teams to deal with arrears. As things change it will be vital for lenders to ready themselves and get the infrastructure in place to deal with an inevitable rise in arrears. It will also be incumbent on lenders to manage borrowers and ensure that arrears don’t build up to an unhealthy level, otherwise repossessions too may rise.”

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