From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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  4. Mortgage arrears and possessions fell again in the second quarter

Mortgage arrears and possessions fell again in the second quarter

Published: 10 August 2017

The number of mortgages in arrears of 2.5% or more of the outstanding balance declined to 88,200 in the second quarter of this year, the lowest level since at least 1994 when this run of data began. The total was 5% lower than in the first quarter (92,600) and amounted to 0.8% of the more than 11 million mortgages outstanding in the UK.

The second quarter also saw a fall in the number of mortgages across all arrears bands, including those with the highest levels of arrears. In the same period, the number of mortgages with arrears of 10% or more of the outstanding balance totalled 25,200, down 5% from 26,500 in the preceding quarter. This brought a welcome end to a period of five successive quarters in which this figure had edged upwards from 23,400 in the first quarter of 2016.

Chart 1: Arrears on mortgages, 2.5% or more of balance outstanding

 20170810 Chart 1 Arrears on mortgages, 2.5% or more of balance outstanding

Source: UK Finance

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The number of properties taken into possession also declined in the second quarter from 1,900 to 1,800 (accounting for 0.02% of all mortgages). The total was the same as in the final quarter of last year, and is the lowest figure since quarterly data was first published in 2008.

Chart 2: Number of possessions, owner-occupied and buy-to-let markets

Chart 2 Number of possessions, buy-to-let and owner-occupied markets

Source: UK Finance

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In line with a trend that has become established in recent data, the rate of buy-to-let arrears was lower than arrears in the owner-occupied sector, although the buy-to-let possession rate was higher. This is because lenders extend a high level of forbearance to owner-occupiers to help them overcome any period of financial difficulty and stay in their homes wherever possible.

Chart 3: Arrears by bands as a proportion of total balance

Chart 3 Arrears by bands as a proportion of total balance outstanding

Source: UK Finance

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Commenting on the data, UK finance head of mortgages Paul Smee said:

These figures show that the overwhelming majority of borrowers are managing their mortgage payments successfully, and many of those who have experienced some difficulty in the past are able to recover their financial position. The recent improvement in the number of mortgages with high levels of arrears is particularly welcome.

Borrowers are being helped by low interest rates, but mortgage costs are certain to rise at some stage. It is important therefore for customers to plan ahead and consider how their finances would be affected in those circumstances. As ever, lenders will continue to help borrowers resolve any financial difficulty if possible, so customers should not hesitate to contact their lender if they anticipate any payment problems.

Notes to editors

1. UK Finance is a new trade association which was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

2. Due to a change in methodology to compile arrears and possession data, to improve the quality of 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. Arrears and possessions figures are for the UK as a whole. There is no breakdown of data for English regions or for individual countries in the UK.

4. The Ministry of Justice’s mortgage and landlord possession statistics can be found on the gov.uk website. These include quarterly national statistics on possession claim actions in county courts by mortgage lenders and social and private landlords.

5. UK Finance arrears and possessions data for the third quarter of 2017 will be published on Thursday 9 November 2017.

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