Around 1,270 homeowner properties were repossessed in the second quarter of the year, up by 15 per cent from the same point in 2018, new figures from UK Finance have revealed.

The trade body suggested that this “slight” increase was at least in part down to a backlog of historic cases, noting that these cases were being “processed in line with the latest regulatory requirements”.

This was a reference to the guidance introduced in 2017 by the Financial Conduct Authority on how to treat customers with payment shortfalls, including how to calculate their monthly installments.

UK Finance said that lenders had been reviewing a “large” number of cases in line with this guidance, but emphasised that possession is “always a last resort”, noting that despite the increase, repossessions remain at historically low levels.

The number of homeowner mortgages in arrears is at a low level compared to the past, with with 75,890 mortgages in arrears or 2.5 per cent or more. That’s 0.84 per cent of all mortgages outstanding, and has fallen in number by three per cent on the same period last year.

On buy-to-let, there were 4,660 mortgages in arrears of at least 2.5 per cent, up by five per cent from the corresponding period in 2018. There has been a sharp rise in the number of landlords in arrears of at least 10 per cent, up by 12 per cent to 1,200, though UK Finance argued: “Although there have been some increases in buy-to-let arrears, these are small and from a low base.”

Around 590 buy-to-let properties were repossessed, two per cent up on last year.

Important to identify struggling borrowers early

Mark Pilling, corporate sales manager at Spicerhaart, said that there are some instances where despite the assistance of a lender, repossession becomes the most viable option, and noted that managing these cases as early as possible “is in the best interest of all parties”.

He continued: “It is therefore imperative that lenders identify those who are already having difficulties managing their mortgage or are likely to in the future, as early as possible so that they can find a solution before repossession becomes the only option.”

Low rates keeping arrears in check

Shaun Church, director at Private Finance, argued that the “ultra-competitive” mortgage rates available today were helping to keep arrears at historic lows.

Citing mortgage lending trends data from UK Finance, he added: “Mortgage payments continue to remain incredibly affordable in relation to income. For those remortgaging, just 16p in every £1 they earn is now being spent on their mortgage payments, while for first-time buyers this is only slighter higher at 17p for every £1.”