Mortgage arrears and possessions fell in the second quarter of 2020, but it was a very different situation for both lenders and borrowers, with Covid-19 putting the usual processes on hold.

Lenders have offered payment holidays for up to six months, meaning borrowers could avoid falling into new arrears by requesting such a payment deferral.

Over two million have been approved, with just under one million still in place as borrowers begin to exit their payment deferral arrangements and resume monthly payments.

As a result arrears have remained low, with 73,580 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2020. This is three per cent fewer than in the same quarter of the previous year.

Within the total, 22,840 borrowers had more significant arrears of 10 per cent or more of the outstanding balance, two per cent down on the same time last year.

Repossessions fall over 90%

Only 90 homeowner properties and 130 buy-to-let properties were repossessed in the second quarter of this year, a massive fall of 93 per cent and 80 per cent, respectively, compared to the same period in 2019.

This was due to the industry moratorium on repossessions, and the low numbers reflect those cases where the customer requested the repossession to go ahead or where the property was vacant.

Landlord arrears up

There were 5,000 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2020, said UK Finance.

This is six per cent greater than in the same quarter of the previous year.

Within the total, there were 1,270 buy-to-let mortgages with more significant arrears (representing 10 per cent or more of the outstanding balance), five per cent up on the same quarter of the previous year.

The trade association said that the increase is relatively small and from a low base, and is likely due to the early effects of covid-19.