Figures from UK Finance show that arrears over the past year had been falling, going from 75,670 in Q1, to 74,450 in Q2 and 74,440 in Q3 last year.
UK Finance added that there were 28,390 homeowner mortgages in more significant arrears, which is 10 per cent or more of the outstanding balance. This is two per cent lower than the previous quarter.
The report continued that 6,060 buy-to-let mortgages were in arrears of 2.5 per cent or more of the outstanding balance, which is five per cent more than the previous quarter.
Within the total, UK Finance said that there were 1,770 buy-to-let mortgages in more significant arrears of 10 per cent or more of the outstanding balance. This was one per cent less than the previous quarter.
Resi and BTL possessions drop by nearly third
The report added that 500 homeowner mortgage properties were taken into possession, which is 29 per cent fewer than the previous quarter.
Around 320 buy-to-let mortgaged properties were taken into possession in Q4, which his 20 per cent down on the previous quarter.
Matt Bartle, director of mortgages at Leeds Building Society, said: “Over the next 18 months, around 1.4 million borrowers will be coming off their current fixed rate deals and many will be facing an increase in their new monthly payments. That’s why it’s important that if any borrowers are experiencing financial problems, they should talk to their lender as soon as possible. Lenders can do several things to help borrowers, but the sooner they are aware of payment difficulties, the more options they have to help.”
A spokesperson from Leeds Building Society said that repossessions tend to lag behind increases in interest rates and consequent increases in mortgage rates.
They pointed to the 1990s, when at the very start of the decade, UK mortgage rates rose to 15.4 per cent in March, the highest ever level, and then fell to around 14.5 per cent in October 1990.
“The ‘shock’ to people’s budgets of the record high levels of interest rates impacted both house prices and the level of repossessions. Negative equity became a reality and impacted over a million people,” they explained.
Repossessions peaked in 1991 at 75,540, which was due to record levels of interest in 1990 and is around a fivefold increase on 1989.
However, Leeds said there were key differences between now and the 1990s, with fixed rates becoming more common and insulating borrowers to a certain extent from rate rises. The mutiual noted that lender forbearance has also improved.