UK Finance, which is the collective voice for the banking and finance industry, representing more than 300 firms, and has published data revealing mortgage arrears in the second quarter of 2023.
The figures show a very large increase of 41% in buy-to-let mortgage arrears in the band between 2.5% and 5% of the balance.
Mortgages in arrears accounted for 0.93 per cent of all homeowner mortgages outstanding, and 0.44 per cent of all buy-to-let mortgages outstanding in the second quarter of 2023.
There were 8,980 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 28 per cent greater than in the previous quarter.
Within the total, there were 4,810 buy-to-let mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 41 per cent greater than in the previous quarter.
There were 81,900 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 7 per cent greater than in the previous quarter.
Within the total, there were 30,940 homeowner mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 12 per cent greater than in the previous quarter.
610 homeowner mortgaged properties were taken into possession in the second quarter of 2023, 19 per cent fewer than in the previous quarter.
440 buy-to-let mortgaged properties were taken into possession in the second quarter of 2023, 7 per cent greater than in the previous quarter.
Comments (3)
What did I say a year ago and its going to get worse ……. its not rocket science to see this coming. no wonder many BTL landlords are selling up.
The figures show a very large increase of 41% in buy-to-let mortgage arrears in the band between 2.5% and 5% of the balance.
Well, who would have thought that would happen if interest rates rose?
Many “5% yield” BTL properties were barely paying for themselves on a monthly basis before the credit crunch.
Then the government changed the tax rules so that rent is treated as income.
Then interest rates rose.
Then the cost of living went through the roof so tenants can’t afford their current rent.
And, of course, rents are increasing because of restricted supply and increasing demand.
Landlords can’t afford their new mortgage payments because the lenders are charging higher rates.
If a tenant misses a payment (they have to feed their children after all), that has to come out of the landlord’s own pocket. But their pockets are empty because of the cost of living crisis and mortgage rate increases on their primary residence.
15 years of stupid low interest rates are one of the causes.
But another is the UK’s obsession with ever increasing house prices, well beyond wage rises.
Then there’s restricted supply.
I don’t think we’re about to go through a late 80’s/ early 90’s property crash, but the UK is going to be a very hard place to afford to live in for the next 20 years or so.
The number of housing ministers over the last 40 years is truly disturbing!
The daily cost of a roof over their heads is one of the most pressing issues for a significant percentage of the population.
Our society is only as strong as it’s weakest link. The Tory government has spent the last decade dividing to conquer and making the weakest in society as weak and disenfranchised as possible.
I thought the following was a simple Chinese proverb, but it is actually a curse: “May your children live in interesting times.”
The boomer generation has succeeded in making that come true. The silent generation taught them how to do it. Gen X (mine) sleep-walked through it and our kids will now reap what has been sown.
Missing from the story is, why defaulting in BTL? The other side is the increasing rent arrears, so there are two things going on and its going to get worse through into 2024.