Serious Arrears on Buy-to-Let Mortgages Up by 12%, Reports UK Finance

Serious arrears on buy-to-let mortgages were up by 12% in the first quarter (Q1) of the year, compared to the same period of 2018, according to the latest Arrears and Possessions report from UK Finance.

In Q1, 4,620 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance, which is up by 3% on the same quarter of last year. Within this total, 1,200 loans had more serious arrears, defined as 10% or more of the outstanding balance. This is up by 12% on Q1 2018.

While UK Finance has reported mixed signs in buy-to-let arrears, these do not indicate a clear increasing trend at this stage. Furthermore, it claims that these increases are small and from a low base.

During the same period, 570 buy-to-let mortgaged properties were taken into possession – down by 14% on the same quarter of last year.

In Q1 2019, 76,580 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, which is down by 4% on Q1 2018. Within this total, 23,520 homeowner mortgages had more serious arrears – down by 3% on the same quarter of last year. 

The proportion of homeowner mortgages in arrears remains at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month.

1,380 homeowner mortgaged properties were taken into possession in Q1 – up by 10% on the same quarter of last year, but well below the levels seen between 2009-14. This slight increase in possessions has been driven, in part, by a backlog of historic cases that are being processed in line with the latest regulatory requirements.

UK Finance notes that lenders continue to show flexibility to borrowers in financial difficulty, and possession is always a last resort.

Landlords, what do you believe is causing the level of serious arrears to rise?