The number of mortgages in arrears in the third quarter of 2018 was 5% down on the same time last year, according to UK Finance.

It said there were 77,600 homeowner mortgages in arrears of 2.5% or more of the outstanding balance.

Within that total, there were 24,090 mortgages with more significant arrears (representing 10% or more of the balance), unchanged from last year.

Buy-to-let arrears were also down overall, by 1%, although more serious arrears from landlords rose 3% over the year to 1,150.

Sharp fall in repossessions

The number of repossessed properties has fallen by almost 20% (19%) year on year, with 1,080 homeowner mortgaged properties taken into possession in the third quarter of 2018. And just 500 buy-to-let mortgaged properties were repossessed in Quarter 3, 17% fewer than in the same quarter of the previous year.

Jackie Bennett, director of mortgages at UK Finance, said: “It is encouraging that homeowner arrears and repossessions remain at historically low levels, which shows the vast majority of borrowers continue to repay their mortgages in full and on time each month.

“We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the advice and support available.”

Creeping up

Despite the figures showing a fall in arrears and repossessions over the last year, numbers have crept up in the last few months. Keith Haggart, managing director of Responsible Lending, warned of potentially choppier waters ahead.

He said: “It’s probably no coincidence that arrears have crept up in the quarter that saw the first of what many people believe will be a series of interest rate rises.

“August’s rate hike won’t have any immediate impact on those borrowers on fixed rate deals, but anyone on a deal coming to an end over the next few months, will likely to see their monthly payments rise.

“And for the hundreds of thousands of people who are still on interest only mortgage deals, especially retirees who will struggle to remortgage, a couple of rate rises in quick succession could well tip them over the edge.”