Mortgage Arrears Reach Highest Level Since 2014: A Growing Concern for Homeowners

The latest data from the Bank of England reveals a worrying trend in the mortgage market. The total value of outstanding mortgage balances with arrears has surged to its highest level since 2014, reaching £21.3 billion in the first quarter of 2024. This marks a 44.5% annual increase, sparking concerns about the financial stability of homeowners.

The proportion of total loan balances in arrears has risen to 1.28%, a peak not seen since the final quarter of 2016.

The rise in mortgage arrears is attributed to the increasing cost of living and the subsequent squeeze on household incomes. The Bank of England’s decision to raise interest rates has led to higher mortgage repayments, leaving many homeowners struggling to keep up.

“The continued increase in outstanding mortgage balances with arrears is a clear economic indicator that we are not out of the woods yet. It suggests that many households are still struggling with the cost-of-living crisis and spike in mortgage rates over the past two years.” - Tom Cuppello, risk director at Broadstone

Despite the concerning trend, experts note that the growth rate of arrears is slowing. This could be a sign that the mortgage market is stabilizing, but it’s essential for homeowners to remain vigilant and seek support if they’re struggling with repayments.

Mortgage rates have been rising, putting pressure on homeowners to keep up with repayments.

In response to the growing issue, many lenders have committed to a mortgage charter, providing various options to support borrowers facing difficulties. Homeowners are advised to contact their lenders as early as possible if they’re concerned about falling behind on their mortgage payments.

Santander and Nationwide have introduced new mortgage rules, allowing customers to lock in a new rate up to four months ahead of their current deal ending.

As the mortgage market continues to evolve, it’s crucial for homeowners to stay informed and adapt to the changing landscape. By understanding the trends and taking proactive steps, homeowners can navigate the challenges and ensure a stable financial future.