Mortgage arrears fall to lowest level for 20 years

Posted 16 August 2016 by Ben Salisbury

The Council of Mortgage Lenders reports that owner-occupied repossessions have fallen but evictions of rental tenants by landlords has soared since 2011

Low mortgage rates have helped the number of mortgages in arrears to reach its lowest level since record began over 20 years ago but higher rental prices have caused an increase in evictions, new figures show.

The Council of Mortgage Lenders (CML) released data last week which shows at the end of June only 92,500 mortgages were in arrears of at least 2.5% of the balance, down from 95,900 at the end of March. This is just 0.84% of all mortgages.

Compared to 12 months ago, the number of mortgages in arrears was 13.4% lower, down from 106,800.

Earlier in August, the Bank of England moved to cut interest rates to a new record low of 0.25%, from the previous record low of 0.50%, where the rate has been since March 2009. These low base rates have led to cheaper mortgage repayments and better deals for homeowners.

The CML reports that the number of properties repossessed also fell in the second quarter, down to 1,900 from 2,100 in the first quarter with falls in repossessions of both owner-occupied properties and buy-to-let’s. If this trend continues for the rest of the year the number of mortgaged property repossessions will be the lowest since 1982, when there were almost half the number of mortgages, 6.5 million, compared to 11.1 million now.

The data shows that repossessions are higher amongst buy-to-let landlords than homeowners, but with mortgage arrears this is reversed.

CML director general Paul Smee said: “Another welcome reduction in arrears and possessions shows that borrowers are continuing to prioritise their mortgage commitments and that lenders remain committed to helping them through a period of temporary difficulty, wherever possible.

“As ever, the key to success in dealing with any payment problems is to address them as soon as possible. Any borrowers anticipating difficulty in paying their mortgage should therefore speak to their lender at the earliest opportunity.”

Meanwhile, figures out from the Ministry of Justice (MOJ), due out on Friday 12 August are expected to show how the number of repossessions of mortgaged properties is considerably lower than the number found in the rental sector and the number of evictions of tenants from private landlords has almost doubled over the past five years to 22,592 in the first six months of 2016, up by 46% over five years.

The data is supported by recent figures from Homelet which shows that the average price of renting in the UK, excluding London, reached £779 a month in July, up 2.3% from last year and by 15% from five years ago.

MOJ figures for England and Wales in 2015 reveal 42,279 rental evictions compared to 5,592 mortgaged property repossessions, even though the rental sector makes up just a third of the housing stock.

The CML said this is because lenders give owner-occupiers more time and help to recover from temporary problems that cause late mortgage payments but move quicker to protect their position on rental properties in the commercial buy-to-let sector.

8 November 2016
Landlords and tenants need to follow guidelines for advertising or searching online listings to optimise the benefits of using Gumtree and other ...Read more
21 February 2017
Managed well, investing in a buy-to-let property portfolio can reap rewards but there are pitfalls. WhatHouse? offers top tips to buy-to-let succ...Read more
More landlords are forming companies
14 December 2016
With tax changes to the buy-to-let sector set to be introduced in April, many private landlords plan to form companies to reduce their tax liabil...Read more

Click here to see your activities