Arrears and possessions

Trends covering arrears and possessions of property linked to first charge mortgages provided by members.

Latest Data - Q1 2022

Published on 19/05/2022

Key data highlights:

  • The total number of customers in arrears with their mortgages continued to fall in the first quarter of 2022. Possessions have increased in the first three months of this year, rising from a low base as courts continue to work through the backlog of cases accumulated through the pandemic as a result of the possession moratorium from March 2020 - 1 April 2021.
  • Overall, there were 75,670 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance at the end of March 2022, a reduction of nearly 4,000 homeowner mortgages compared with the previous quarter. This is five per cent lower than the same period a year prior.
  • Within the total, there were 24,980 homeowner mortgages in early arrears (those between 2.5 and five per cent of balance in arrears), a decrease of seven per cent on the previous quarter and 19 per cent fewer than the same period in 2021. In addition to decreasing, these early arrears figures remain substantially lower than the numbers seen before the pandemic began. Customers who are facing financial difficulty are encouraged to contact their lender early, as they stand ready to help.
  • Also within the total, there were 29,340 homeowner mortgages with more significant arrears (representing ten per cent or more of the outstanding balance), 670 less cases than the previous quarter. This is the first decrease in these arrears since Q4 2019 – before the pandemic began. Although it is too early to draw out a confirmed trend, this may reflect that customers in very long term financial difficulty and unable to recover are progressing to repossession or sale, which may allow them to realise any remaining equity and to seek more sustainable housing options. 
  • There were a total of 5,860 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the first quarter of 2022 – a decrease of two per cent compared with the previous quarter and five per cent down on the year previously. 
  • In terms of possessions, 580 homeowner mortgaged properties and 370 buy-to-let mortgaged properties were taken into possession in the first quarter of 2022. It is important to note that year-on-year comparisons will look unusually large due to the Possession Moratorium from March 2020 - 1 April 2021, over which period no enforced possessions took place. In absolute terms there were 240 more possessions in Q1 2022 compared with the previous quarter, however the total for this quarter is less than half the total in Q4 2019. 
  • The voluntary possessions moratorium, in response to the Omicron variant, ended on 4 January 2022, and the number of possessions has been gradually increasing as the courts resume working through the backlog of cases accumulated over the first moratorium. It is important to note that these borrowers had been in financial difficulty prior to the pandemic. Possession is always a last resort after tailored support is exhausted and a thorough court-based process has carefully considered the borrower’s individual circumstances.    

Commenting on the data, Eric Leenders, Managing Director of Personal Finance at UK Finance, said:

The number of customers in arrears remains low and fell for the fourth quarter in a row. The number of homeowner mortgages in arrears is now 10 per cent lower than a year ago and buy to let mortgage arrears are 5 per cent lower for the same period.

"The first quarter arrears data is therefore largely positive, although energy price and national insurance rises in effect from April will increasingly affect household budgets throughout the rest of the year. In contrast, the fact that the majority of borrowers are on fixed rate mortgages means they are protected from increased borrowing costs should base rate rise further.

"The anticipated increase in possessions, as the courts reduce backlogs following the conclusion of the industry moratorium in January, can be seen in first quarter data, although this is from a low base.

"Lenders continue to provide tailored forbearance and support to borrowers who need help and will not look to put customers on a repayment plan that they cannot afford so anyone experiencing financial difficulty should contact their finance provider as soon as possible to discuss options available.

Mortgage Arrears Possessions Update - 19 May 2022