The proportion of UK mortgages in arrears rose to its highest degree since 2016 on the finish of final 12 months, in accordance with information from the Bank of England, as debtors have been squeezed by excessive rates of interest and family prices.
The central financial institution’s figures confirmed that over the last three months of 2023, the share of excellent mortgage balances in arrears rose to 1.23 per cent from 1.12 per cent within the earlier quarter – the best degree because the ultimate quarter of 2016.
The worth of those balances in arrears got here in at £20.3bn, a 9.2 per cent rise from the earlier quarter and a 50.3 per cent leap from the identical interval in 2022.
The figures come after lenders have hiked mortgage charges over the past three years as a consequence of rising inflation and better rates of interest.
Rates began to come back down early this 12 months with extra confidence on rate of interest cuts, though they nonetheless stay a lot greater for the roughly 1.6m folks whose cheaper mounted offers expire in 2024.
The Bank of England discovered that the worth of gross mortgage advances fell 13.4 per cent from the earlier quarter £54.0bn, down 33.8 per cent from the identical interval in 2022.
Surging home costs and borrowing prices have pushed one in 5 first-time patrons to take out home loans of 35 years or longer, in accordance with information from UK Finance, in a bid to offset affordability pressures with decrease month-to-month repayments.
Commenting on the Bank of England’s information, Justin Moy, managing director at EHF Mortgages, informed Newspage: “These are very alarming figures. When arrears have been low for so long, any increase looks significant. It’s worrying though when we have so many borrowers yet to feel these higher rates and the Mortgage Charter has also given six months of interest-only relief, too.”
Elliott Culley, director at Switch Mortgage Finance, added: “The effect of all the base rate increases we’ve had is finally hitting home. There was always going to be a lag in the data from when the changes were made, and we are now at a point where borrowers are feeling squeezed.”
