Mortgage arrears and possessions Q3 2023

UK Finance today releases its latest mortgage arrears and possessions data for Q3 2023, while highlighting continuing lender support for customers.

Key information:

• The number of homeowner and buy-to-let (BTL) mortgages in arears has risen broadly in line with 2023 UK Finance forecasts.
• Possession figures have decreased nine per cent for homeowners and remained steady for BTL properties compared with the previous quarter.
• UK Finance analysis shows that the total number of homeowner mortgages in arrears is currently one per cent of the outstanding mortgage stock, and 0.57 per cent for BTL.
• Lenders continue to provide customers who are struggling with tailored support.

Homeowner and buy-to-let mortgage arrears  

UK Finance’s latest data shows that there were 87,930 homeowner mortgages in arrears in Q3 2023, seven per cent more than the previous quarter. The number of BTL mortgages in arrears was 11,540, a 29 per cent increase during the same period. The increases in arrears are driven by the combined impact of both cost-of-living pressures and higher interest rates. In particular, interest rate pressures are felt more acutely in the BTL sector, where landlords may not be able to raise rents to cover the increases in their payments.

For comparison, in Q3 2009 the number of homeowner and BTL mortgages in arrears was 207,200 - over twice the 99,480 seen last quarter. This reflects the benefits of lender stress tests carried out to ensure borrowers will be able to keep up with their mortgage payments, even if their interest rate rises above those in place when they first took out their mortgages.

Homeowner and buy-to-let mortgages in arrears

Homeowner mortgages in arrears accounted for one per cent of all outstanding residential properties with a mortgage. The figure for BTL mortgages is 0.57 per cent. UK Finance expects the combined number of homeowner and BTL mortgages in arrears to remain below one percent of the total number of mortgaged properties come the end of 2023.

Possessions

Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort. 630 homeowner mortgaged properties were taken into possession in the third quarter of 2023, nine per cent fewer than in the previous quarter.

450 BTL mortgaged properties were taken into possession during the same period, unchanged from Q2 2023.

Lender support for borrowers

All lenders have support available to anyone struggling with their mortgage payments. There are a range of options which will be tailored to customers’ individual circumstances. If customers need support, or are worried about their finances, they should get in touch with their lender to discuss the options available for their circumstances.

Tailored support provided by mortgage lenders to customers struggling with their mortgage payments could include: 

• Extending a mortgage term to reduce payments 
• A temporary switch to interest-only payments 
• A temporary reduction in payments (including zero payment if appropriate)  
• A part interest-only, part repayment plan 

In addition, 48 mortgage lenders representing over 90 per cent of the market have signed up to the government’s Mortgage Charter, committing them to additional support for borrowers.

This includes giving customers approaching the end of a fixed-rate mortgage the chance to lock in a deal and request a better like-for-like deal if rates change up to six months ahead, and a guarantee of no possession within 12 months of your first missed payment.  

Eric Leenders, Managing Director of Personal Finance, UK Finance, said, “Anyone worried about making their mortgage payments should contact their bank as soon as they can. All lenders have teams of experts ready to help anyone struggling with their mortgage payments with tailored support. The sooner you get in touch, the more support options your lender will be able to offer. What’s more, reaching out to your bank to find out what support is available won’t affect your credit score.”