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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Mortgage arrears fell in third quarter

Published: 8 November 2017

The number of mortgages in arrears of 2.5 per cent or more of the outstanding balance fell again in the third quarter of 2017, but cases of possession edged upwards from an historically low level. At 88,300, the number of loans in arrears was two per cent lower than in the second quarter of the year (90,400) and at its lowest level since this run of data began in 1994.

 

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

chart 1 1117

Source: UK Finance

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The number of properties taken into possession in the third quarter nudged upwards to 1,900, the same total as in the first three months of this year. The second quarter total of 1,800 cases of possession had been the lowest since quarterly data began in 2008, and the proportion of properties taken into possession (at 0.02 per cent) has remained unchanged in each period since the second quarter of 2015. Within the total, the number of owner-occupied properties taken into possession increased in the third quarter from 1,100 to 1,300, while buy-to-let repossessions fell from 700 to 600. The last time the number of owner-occupied possession rose was in the first quarter of 2014, when the total increased from 4,900 to 5,000.

 

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

chart 2 1117

Source: UK Finance

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The number of mortgages in arrears fell across all bands, apart from those owing 10 per cent or more of the outstanding balance. The number of mortgages in this category edged up by 0.4 per cent from 25,500 to 25,600, partially reversing a four per cent fall in the number of loans in this category in the second quarter of the year.

A total of 83,300 owners-occupiers were in arrears of 2.5 per cent or more of the balance, down two per cent from 85,300 in the second quarter. Reflecting the pattern across the wider market, owner-occupier arrears declined in all bands apart from those owing 10 per cent or more of the balance, with the total in this category edging up from 24,400 in the preceding quarter to 24,500.

Buy-to-let arrears were flat, apart from a small increase in those with higher levels of debt. Overall, the number of buy-to-let mortgages in arrears increased by two per cent to 5,100 (5,000 in the second quarter).

 

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

chart 3 1117

Source: UK Finance

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Commenting on the data, UK Finance’s Head of Mortgages Policy June Deasy said:

“Even a small rise in mortgage possessions is disappointing but, after a long period of declining numbers, it was inevitable that they would rise again at some stage. Both arrears and possessions remain low by historical standards and look set to be lower for the year than we predicted at the start of 2017.

“We expect the vast majority of mortgage borrowers to continue to manage their finances successfully but they should continue to keep their plans under review. Any customer who thinks they may experience payment difficulty should always speak to their lender at the earliest opportunity. Lenders remain committed to working with borrowers to keep them in their home wherever possible, and possession continues to be the last resort.”

Notes to editors

  1. 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.
  2. 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.
  3. 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.
  4. UK Finance arrears and possessions data for the fourth quarter of 2017 will be published on Thursday 8 February 2018.

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