The number of mortgages in arrears in the UK fell slightly in the first quarter of 2017, and is down on both the previous quarter and a year ago, the latest data shows.
Overall, there were 92,600 mortgages in arrears, representing 0.84% of all mortgages, and the lowest quarterly rate on record, according to the figures published by the Council of Mortgage Lenders (CML) which represents the vast majority of lenders.
Within the total stock of arrears cases, all arrears bands except the most serious showed a fall. However, the stock of cases with arrears of over 10% of the mortgage balance rose to 26,500.
Although this is a small number within the total mortgage market, the CML said that it does suggest that there is a minority cohort of borrowers for whom arrears are worsening.
The number of properties taken into possession was also 10% down on a year ago, but up on the fourth quarter which the CML said reflects the usual seasonal pattern. In total, 1,900 properties were taken into possession, the eighth successive quarter of a repossession rate of 0.02%.
In line with the normal trend of recent times, the buy to let arrears rate was lower than the owner occupier arrears rate, but the repossession rate was higher. The CML said this is because of the high level of forbearance that lenders typically seek to extend to home owners to try to enable them to resolve their difficulties and keep their homes wherever possible.
‘This positive picture of mortgage performance is good news, and reflects a continuing benign interest rate and employment environment. However, it is important that borrowers continue to think about the future, and how they would cope with less positive conditions, even if that scenario seems distant,’ said Paul Smee, CML director general.
‘Lenders will always work with borrowers to try to help them through the inevitable periods of difficulty that life may throw at them, such as periods of unemployment, illness or relationship breakdown. So anyone facing difficulty should not hesitate to make contact with their lender, who will wish to help them resolve their difficulties and remain in their home wherever possible,’ he added.
Meanwhile, there was some potential good news for first time buyers and home movers as the Bank of England signalled that the current historic low interest rates are likely to continue for some time. Seven out of the eight members of the Monetary Policy Committee voted to leave rates unchanged at 0.25%.
However, the Bank indicated that if the economy continues to recover as it expects then interest rates may need to rise more quickly than the market currently expects.
‘Anyone looking to buy their first home or switch mortgage can breathe a sigh of relief. Locking in a low fixed rate mortgage now can save you an absolute fortune in the long run, especially if you’re one of the three million UK home owners currently paying over the odds on a lender’s Standard Variable Rate,’ said Ishaan Malhi, chief executive officer of online mortgage broker Trussle.
‘With inflation still climbing, the signs suggests that the first interest rate rise in a decade may come soon. Any home owners thinking about remortgaging, or hopeful first time buyers holding back until the result of the general election is known, might want to act soon to avoid missing out on historically low mortgage rates,’ he added.
