Some 1,030 homeowner mortgage properties were taken into possession in Q4 2024, 12% up on the previous quarter but “significantly less than the long-term average”, according to the latest data from UK Finance.
The report noted that there were 700 buy-to-let (BTL) mortgage properties taken into possession, unchanged from the previous quarter.
UK Finance said possessions had risen since the “artificially low numbers through the pandemic”, but “remain very low by historic[al] standards”.
“The 6,440 possessions taken through 2024 was 20% lower than the average seen in the five years before 2020 and 87% below the previous peak seen in 2009,” the report stated.
Meanwhile, homeowner mortgages in arrears of 2.5% or more of the outstanding balance came to 92,170 in Q4, a drop of 2% on the previous quarter.
According to the latest UK Finance data, within that total, there were 31,720 homeowner mortgages in arrears between 2.5% and 5%, which is a 3% fall on the previous quarter.
The report stated that there were 12,610 BTL mortgages in arrears of 2.5% or more of the outstanding balance in Q4 2024. This is a 3% decrease on the previous quarter.
In that figure, there were 4,810 BTL mortgages in arrears between 2.5% and 5% of the outstanding balance, a drop of 5% on the previous quarter.
Mortgages in arrears accounted for 1.06% of all homeowner mortgages outstanding and 0.65% of all BTL mortgages in the fourth quarter of the year.
David Miller, divisional director at Spicerhaart Corporate Sales, said: “We can be really encouraged by the fact that the number of arrears cases is decreasing, both on a quarterly and annual basis. While this is true for the lower arrears bands, numbers in the highest arrears band only continues to grow, which is likely to contribute to the rise in possessions. While perhaps with fewer options in terms of refinancing, they are certainly the ones that need the greatest support from lenders.
“Given the FCA’s recent communications with mortgage intermediaries, it’s abundantly clear that Consumer Duty remains their priority, along with minimising potential harm and poor outcomes – particularly for vulnerable customers. With all of financial services facing this same remit, it’s never been more important for lenders to have options in place to support clients in difficulty and deliver positive outcomes, with an assisted sale scheme being a clear example.
“As demonstrated in the figures with possessions still making up a small proportion of cases, lenders continue to do all they can to ensure that this is the last resort that it should be. We’re definitely seeing all the hard work of lenders helping customers that accept support and that is demonstrated in today’s figures. Part of this comes from robust forbearance measures, as well as the availability of good technology and intelligence, and the right partners in the market to help build a proactive strategy to support clients in difficulty and assess the value and any potential risk found in a lender’s portfolio.”
Melanie Spencer sales and growth lead at Target Group, commented: “Last quarter, the volume of arrears cases was falling and they’re still going in the right direction. With the UK set for a series of base rate cuts this year, borrowing pressures should ease. Increased government spending announced at the October budget should also drive growth supporting borrowers. Theoretically, cases should reduce.
“But we need to temper than with the news from the wider economy.
“RICS says housebuilders are doing less work than they were a few months ago. And the UK private sector economy expanded more slowly in last month as businesses laid off staff at the quickest rate since the 2008 global financial crisis. Rising unemployment will inevitably mean owner-occupiers and getting into arrears. Landlords aren’t immune from these shocks either – this week Grainger reported rents are rising at almost half the pace they were this time last year.
“This all points to borrowers needing more support from lenders. They will need the right systems in place to manage this process proactively, provide a much-needed resolutions for cases, and fall back on possessions only as a last resort. Early contact and remediation is essential to improve outcomes for all parties.”
Read the orginal article: https://propertyindustryeye.com/homeowner-possessions-rise-but-mortgage-arrears-fall/
