UK Finance reports that 93,680 homeowner were in mortgage arrears in the last quarter of 2023
The number of homeowners falling behind on their mortgage payments is continuing to rise due to the cost-of-living crisis, according to trade association UK Finance.
As living costs and high interest rates continue to squeeze households, 93,680 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance in the last quarter of 2023. This figure marks a 7% jump compared with the previous quarter and is 25% higher than the same period in 2022.
Of these, 30,750 mortgages were in serious arrears, equating to more than 10% of the balance. Despite recent falls in mortgage rates, which will help the 1.5 million homeowners and 230,000 buy-to-let mortgage holders whose fixed-rate deals are due to end this year, the number of people struggling continues to rise.
UK Finance also revealed that 540 homeowner mortgaged properties were repossessed in the fourth quarter of 2023, a 14% fall on the previous quarter. However, there were 13,570 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance during the same period.
This was an 18% increase from the previous quarter and a staggering 124% jump compared with the fourth quarter of 2022. Furthermore, 500 buy-to-let mortgaged properties were repossessed in the fourth quarter of 2023, marking an 11% increase from the previous quarter.
The research also says more people are struggling to pay their mortgages. In the last part of 2023, fewer homes were taken back by banks than before the pandemic. Eric Leenders from UK Finance says: “The number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost-of-living and high interest rates take their toll on households.”
He adds, “Importantly, help is available to anyone worried about their finances please reach out to your lender as soon as possible to discuss the support options available. Lenders have teams of trained experts ready to help. Contacting your lender to find out what support is available won’t affect your credit score.”
A study for StepChange Debt Charity shows that nearly half of the people with mortgages are finding it tough to pay their bills now, which is more than a few months ago. Just over one in five (21%) of those who own homes admitted they had to dip into their savings in the last 12 months to make sure they could afford their mortgage.
Another statistic revealed that nearly a quarter (23%) had to rely on credit to pay off their mortgage debts within the same period. Richard Lane, of the StepChange Debt Charity, voiced his concerns: “We know from our own clients that people tend to prioritise their mortgage and fall behind in other areas when they’re struggling to make ends meet, so it’s especially worrying to see mortgage arrears creeping up across the UK.”
He added: “Higher mortgage payments and wider cost-of-living pressures have eroded people’s ability to cope financially, so it’s not surprising that more are turning to credit or savings to cover essential housing costs. However, with no indication of when rates might come down, people risk finding themselves trapped in long-term problem debt as that credit ultimately becomes unsustainable.”
This data was gathered in a survey by YouGov for StepChange, polling more than 2,000 people.