Home owner mortgage arrears at record lows but more landlords struggling

Landlord mortgage arrears have begun to increase, new industry data says.

Figures from banking trade body UK Finance show there were 5,100 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the fourth quarter of 2017, 2% higher year-on-year.

More worryingly, within this total, there were 1,200 buy-to-let mortgages with arrears representing 10% or more of the outstanding balance, up 20% annually.

Meanwhile, arrears worth more than 2.5% remained low for home owners at 82,800, down 7% since the fourth quarter of 2016.

Overall, 1,100 home owner mortgaged properties were taken into possession in the fourth quarter of 2017, 8% down year on year, while 600 buy-to-let mortgaged properties were taken into possession, unchanged from 2016.

Paul Smee, head of mortgages at UK Finance, said: “Annual home owner repossessions currently stand at a 36-year low, with overall arrears and possessions continuing to decline. This reflects the mortgage industry’s continued commitment to appropriate and prudent lending.”

However, Alastair McKee, managing director of broker One 77 Mortgages, suggested home owners are being supported by low rates.

He said: “It’s the divergence in the fortunes of landlords and home owners that comes through in this data.

“While it’s fantastic news that home owner arrears are at such deep historic lows, those in the industry are well aware this decline has probably bottomed out and has only fallen as far as it has because lending is so cheap.

“Home owners have been able to buy themselves time by remortgaging but those with buy-to-let mortgages don’t have the same wriggle room.”


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