Mortgage Arrears on the Rise: A Growing Concern for UK Homeowners
As the cost of living continues to bite, a worrying trend has emerged in the UK mortgage market. According to recent research, the number of homeowners in mortgage arrears has increased by 3% in the first quarter of 2024, with 96,580 mortgages now in arrears of 2.5% or more of the outstanding balance. This represents a stark reality check for many homeowners who are struggling to keep up with their mortgage repayments.
Mortgage Arrears on the Rise
The statistics paint a concerning picture, with 870 homeowner mortgaged properties taken into possession in the first quarter of 2024, a 36% increase from the previous quarter. Meanwhile, 600 buy-to-let mortgaged properties were taken into possession, a 20% increase from the previous quarter.
“The impact of the cost of living on mortgage repayment affordability can’t be ignored.” - Jason Harris-Cohen, Managing Director of LandlordBuyer
The root of the problem lies in the perfect storm of rising inflation, increasing mortgage rates, and stagnant wage growth. As borrowers come off fixed-rate deals, they are being hit with mortgage repayments that have doubled overnight. This has left many homeowners and landlords struggling to make ends meet.
Mortgage Rates on the Rise
For landlords, the situation is particularly dire. With rent rises outpacing wage growth, arrears are on the rise, and profits are being wiped out by increasing mortgage costs. Many are being forced to surrender their properties to lenders, a situation that is both devastating and avoidable.
As we look to the future, there is a glimmer of hope that mortgage rates may dip below 4% later this year. However, with swap rates becoming increasingly volatile, it’s anyone’s guess what the future holds.
Uncertainty Surrounds the Future of Mortgage Rates
One thing is certain, however - the current state of the mortgage market is a cause for concern. As homeowners and landlords struggle to stay afloat, it’s clear that something needs to change. Whether it’s a shift in government policy or a change in lender attitudes, one thing is clear: the status quo is unsustainable.
A Change is Needed in the Mortgage Market
As we move forward, it’s essential that we prioritize the needs of homeowners and landlords, working together to find a solution to this growing crisis. The future of the UK mortgage market depends on it.
