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  4. Mortgage arrears rate still at 20-year low in third quarter

Mortgage arrears rate still at 20-year low in third quarter

Published: 10 November 2016

The overall arrears rate in the third quarter was the same as in the second quarter, with 0.84% of all mortgages recording arrears equivalent to more than 2.5% of the mortgage balance. This continues to represent the lowest arrears rate for over 20 years.

The overall repossession rate also remained the same in the third quarter as the second quarter, at 0.02%, representing 1,900 mortgages (of which 1,300 were owner-occupier, 600 buy-to-let).


Chart 1: Repossessions, buy-to-let and owner-occupied markets

Chart showing repossessions, buy-to-let and owner-occupied markets

Source: CML Economics

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Although the arrears rate was static, the number of mortgages in arrears rose slightly in the third quarter of 2016 to 93,300, up from 92,500 in the previous quarter, in line with a rise in the estimated total number of outstanding mortgages (up from 11,058,000 to 11,108,000) driven mostly by a rise in the number of outstanding buy-to-let mortgages but also a modest rise in home-owner mortgages.

Within the total of all mortgages in arrears, there was also a shift in the distribution of cases, with the number of cases of lower level arrears continuing to fall, but the heaviest band of 10% or more rising. It is likely that this reflects continuing distortions in the timing of instigating possession actions in the wake of court and regulatory activity (in line with the FCA's recent review).

Chart 2: Arrears on mortgages 2.5% or more of balance outstanding

Chart showing arrears on mortgages, 2.5% or more of balance outstanding

Source: CML Economics

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As a result, the decline in the arrears rate among home-owners in the 2.5-5% band from 0.43% to 0.42% (39,600 cases to 39,000 cases) was offset by the rise in the >10% band from 0.25% to 0.26% (22,800 cases to 24,000 cases).

Chart 3: Arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding

Chart showing arrears by bands as a proportion of total arrears 2.5% or more of balance outstanding

Source: CML Economics

Download the data

Commenting on the new data, CML director general Paul Smee said:

The latest arrears and repossession data still paints a reassuring picture of a market in which financial difficulties are relatively rare, and repossession rarer still. However, there is no denying that economic uncertainty for households is increasing. We would strongly urge all mortgage holders to consider whether there are ways that they can plan ahead for possible changes in the future - whether this relates to employment prospects, mortgage payments, or other spending.

Mortgage lenders are fully committed to ensuring that any home-owner who faces temporary financial difficulty gets help, as far as reasonably possible, to resolve it and to remain in their home. This will continue, whatever the economic climate. But the rise in the more serious arrears category perhaps suggests that we should not be entirely surprised if the number of mortgage repossessions rises a little in future reporting periods.


Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 97% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.3 trillion.

2. Due to a change in methodology used to compile CML arrears and possessions data, to improve the quality of the results, there is a break in the data series between the first and second quarters of 2014. The figures are, however, directly comparable back to the second quarter of 2014.

3. CML arrears and possessions figures are for the UK as a whole. No breakdown of data is available for English regions or for individual countries within the UK.

4. The Ministry of Justice's mortgage and landlord repossession statistics for the same period can be found at the website. These include quarterly national statistics on repossession claim actions in county courts by mortgage lenders and social and private landlords.

5. CML arrears and possessions data for the fourth quarter of 2016 will be published on Thursday 9 February 2017.


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