Some 87,930 homeowner mortgages were in arrears in the third quarter of 2023, 7 more than the previous quarter, UK Finance said.
The number of mortgages in arrears has jumped as cost-of-living pressures and higher rates on home loans bite, according to a trade association representing lenders.
“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.”“This reflects the benefits of lender stress tests carried out to ensure borrowers will be able to keep up with their mortgage payments, even if their interest rate rises above those in place when they first took out their mortgages,” the report said.
And 450 BTL mortgaged properties were repossessed during the same period, unchanged from the second quarter of 2023.There are a range of options which will be tailored to customers’ individual circumstances. This includes giving customers approaching the end of a fixed-rate mortgage the chance to lock in a deal and request a better like-for-like deal if rates change up to six months ahead, and a guarantee of no repossession within 12 months of a first missed payment.
Myron Jobson, senior personal finance analyst at interactive investor, said: “It is clear that the 14 consecutive interest rate hikes have hit many landlords hard – especially the smaller ones. Those who haven’t been able to pass on the heightened cost burden to their tenants or cover it out of their own pocket have been forced to have a radical rethink of their business model.