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Small rise in arrears and repossessions

Christina Hoghton
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Christina Hoghton

Arrears are still at low levels but are expected to rise as the financial fallout of the pandemic starts to bite

There was a small increase (230) of mortgages in arrears in the first quarter of this year compared to the previous quarter, said UK Finance.

A total 77,640 mortgages are now in arrears of 2.5 per cent or more of the outstanding balance.

Within that total, there were 28,100 homeowner mortgages in early arrears (those between 2.5 and 5 per cent of balance in arrears),and 27,280 with more significant arrears (10 per cent or more of the outstanding balance).

The trade body for banks noted that mortgage arrears remain near to the historically low levels, as a direct result of payment deferrals and other tailored forbearance from lenders.

It added that the increases are largely driven by customers who had several missed payments before the pandemic.

There were a total of 5,970 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the first quarter of 2021, a small increase of 130 on the previous quarter.

Repossessions remain low

There were 190 homeowner mortgaged properties and 180 buy-to-let mortgaged properties taken into possession in the first quarter of 2021, 40 more than the quarter before.

UK Finance said that possessions are expected to increase due to the backlog of cases that didn’t happen in 2020 but were in motion before the pandemic.

Eric Leenders, managing director of personal finance at UK Finance, said: “With the economic impact of Covid-19 continuing to be felt, we anticipate there will be further increases in mortgage arrears during 2021.

“Any customer who is concerned about their finances should contact their lender early to discuss the options and tailored support available to them.”

MoJ statistics mirror trend

Ministry of Justice possession figures were also published today and reflected the same low trend.

It said that compared to the same quarter in the previous year, mortgage possession claims (735) are down 85%. Mortgage orders for possession (145) are down 96%, warrants issued (43) are down 99% and repossessions (3) are down almost 100%.

Andrew Montlake, managing director of mortgage broker, Coreco, said: “Lenders and landlords alike have, quite rightly, been patient throughout the pandemic as many people struggled with their businesses, were put on furlough pay or sadly lost their jobs. This is reflected in these very low figures.

“As we start to emerge from the pandemic and all the various Government support measures come to an end, there is, unfortunately, likely to be an increase in the number of repossessions.

“The hope is that lenders and landlords continue to maintain a degree of forbearance going forward and that any move to repossess a property or evict a tenant is very much a last resort.”