Number of homeowners in mortgage arrears edges down

The number of homeowners in mortgage arrears edged down in the third quarter of this year, as coronavirus support measures helped some people to pay down their existing debts, according to a trade association.

Some 74,210 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, according to UK Finance.

This was a fall of 2,400 mortgages in arrears compared with the previous quarter.

Within the total, the number of homeowners in early arrears of between 2.5% and 5% of the outstanding balance was also down compared with the previous quarter.

Barring an initial increase at the end of March 2020, early arrears figures have remained lower than the number seen before the coronavirus pandemic started, UK Finance said.

But the number of home loans in significant arrears has increased slightly. Within the total, there were 27,980 homeowner mortgages with more significant arrears (representing 10% or more of the outstanding balance), which was 70 more cases than the previous quarter. This figure has risen – from a low base – since the first quarter of 2020, UK Finance said.

Nearly three million Covid-19-related payment deferrals were granted by mortgage lenders between March 2020 and March 2021, helping borrowers to manage their finances through the crisis.

The figures also showed that there were 410 homeowner mortgaged properties and 320 buy-to-let mortgaged properties repossessed in the third quarter of 2021.

A repossessions ban was in place from March 2020 to April 1 2021, during which enforced repossessions could not take place.

Eric Leenders, managing director of personal finance at UK Finance, said: “Mortgage arrears continued to fall to near historic lows during the third quarter of the year, with the furlough scheme and the previous mortgage payment deferral scheme supporting people and even enabling some to pay down existing arrears.

“Following the end of the year-long moratorium on possessions in April 2021, there were a small number of possessions in quarter three, however these reflected cases where people were already in financial difficulty before the pandemic. Possession is only ever a last resort after tailored support is exhausted and we expect to see a gradual increase in cases as the courts continue to process those which had been put on hold.

“Lenders continue to provide tailored forbearance and support to borrowers who need help, and we encourage anyone experiencing financial difficulty to contact their finance provider as soon as possible to discuss options available.”