The number of mortgage holders who have fallen behind on their payments climbed in the third quarter in a sign that higher interest rates are increasing financial pressure on homeowners and landlords.
UK Finance’s latest data shows that there were 87,930 homeowner mortgages in arrears in Q3 2023, seven per cent more than the previous quarter. The number of BTL mortgages in arrears was 11,540, a 29% increase during the same period.
The increases in arrears are driven by the combined impact of both cost-of-living pressures and higher interest rates.
In particular, interest rate pressures are felt more acutely in the BTL sector, where landlords may not be able to raise rents to cover the increases in their payments.
However, the arrears are still currently around half of what they were in 2009 after the financial crash, when 207,200 households and landlords were behind on their repayments.
Seek help
Eric Leenders, Managing Director of Personal Finance, UK Finance, said: "Anyone worried about making their mortgage payments should contact their bank as soon as they can.
"All lenders have teams of experts ready to help anyone struggling with their mortgage payments with tailored support. The sooner you get in touch, the more support options your lender will be able to offer.
"What’s more, reaching out to your bank to find out what support is available won’t affect your credit score."
Lenders will always seek to ensure customers remain in their homes and possession is only ever a last resort. 630 homeowner mortgaged properties were taken into possession in the third quarter of 2023, nine per cent fewer than in the previous quarter.
450 BTL mortgaged properties were taken into possession during the same period, unchanged from Q2 2023.
Lender support for borrowers
All lenders have support available to anyone struggling with their mortgage payments. There are a range of options which will be tailored to customers’ individual circumstances.
Tailored support provided by mortgage lenders to customers struggling with their mortgage payments could include:
- Extending a mortgage term to reduce payments
- A temporary switch to interest-only payments
- A temporary reduction in payments (including zero payment if appropriate)
- A part interest-only, part repayment plan
In addition, 48 mortgage lenders representing over 90% of the market have signed up to the government’s Mortgage Charter, committing them to additional support for borrowers.