Repossessions climb in Q3 despite arrears remaining steady, UK Finance data shows

New data from UK Finance has revealed home repossessions soared 15% in Q3 amidst the onerous economic terrain.

A total of 700 homeowner mortgaged properties were taken into possession in the third quarter of the year, a 15% hike compared with Q2. Repossessions of buy-to-let properties also increased 11% to 390 in the same period.

With regards to arrears, the total number of mortgages in arrears of 2.5% or more of the outstanding balance was 74,440, representing a 1% drop from Q2.

Of those in arrears, 28,910 were in significant arrears of 10% or more of the outstanding balance. This is unchanged from the previous quarter, though the underlying is one of a steady rise over the last few years – something lenders “should be watching”, according to Richard Pike, Phoebus Software chief sales and marketing officer, who said:

“Although the figures show very little change from the previous quarter, the underlying number with more significant arrears is the figure that lenders should be watching.

Forbearance during, and since, Covid has meant that lenders have had to change their processes and as such allow more significant arrears to build. With inflation and interest rates rising it is only right to expect that the number of borrowers in arrears is going to increase.”

Pike added that lenders must ready themselves and “manage borrowers” over the coming months:

“Unfortunately, during the period of forbearance lenders didn’t have the need for large teams to deal with arrears. As things change it will be vital for lenders to ready themselves and get the infrastructure in place to deal with an inevitable rise in arrears. It will also be incumbent on lenders to manage borrowers and ensure that arrears don’t build up to an unhealthy level, otherwise repossessions too may rise.”

Note that the total number of buy-to-let mortgages in arrears also crept up by 2%, though those in significant arrears fell by 1%.

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