Mortgage arrears cases up 50% in one year

The value of mortgages that have fallen into arrears reached £20.3 billion in the fourth quarter of 2023, 50.3% higher than in 2022.

Back in Q4 2022 that figure stood at £13.5 billion, outlining how times have gotten harder for mortgage holders.

In that time the cost of lending has risen considerably, as the Bank of England increased the base rate from 2.25% in Q4 2022 to 5.25% in Q4 2023.

Karen Noye, a mortgage expert at wealth manager Quilter, said: “This shows that the large increase in mortgage rates seen over the last couple of years is really starting to bite for some borrowers and this is unfortunately causing them to fall into arrears as they simply can’t afford to keep up with their increased payments,” she stated in reference to the spike in arrears.

She later added: “The changes to National Insurance and Child Benefit at the Budget last week, will barely help considering many people will have seen their mortgage payments shoot up by £300 or more a month.”

Despite this worrying data, at 1.23%, the proportion of loan balances in arrears is still considered low.

Simon Gammon, managing partner at Knight Frank Finance, said: “The housing market has shown remarkable resilience given the surge in borrowing costs that we’ve seen. Much of that is down to forbearance from lenders, which has kept forced selling very low.

“While borrowing costs have likely peaked and should begin falling meaningfully over the summer, the figures demonstrate that we’re not yet out of the woods and conditions remain very difficult for many borrowers.

“Anybody concerned about not meeting their payments should contact their lender at the earliest opportunity. They can offer solutions like switching to interest only payments, or extending the term of a mortgage, to help borrowers through a difficult period.”