Mortgage arrears drop to record quarterly low

The number of mortgages in arrears have fallen to their lowest quarterly rate on record, figures show.

The Council of Mortgage Lenders (CML) recorded 92,600 mortgages in arrears, representing 0.84% of all mortgages, in the first quarter of this year.

The figure was down 10% year-on-year.

However, those with arrears of more than 10% did see a slight rise to 26,500.

In line with the normal trend, the number of buy-to-let arrears rate was lower than the owner-occupier arrears rate with 5,000, but the repossession rate was higher. This is because of the high level of forbearance that lenders typically seek to extend to home-owners to try to enable them to resolve their difficulties and keep their homes wherever possible.

Paul Smee, director general of the CML, said: “This positive picture of mortgage performance is good news, and reflects a continuing benign interest rate and employment environment.

“However, it is important that borrowers continue to think about the future, and how they would cope with less positive conditions, even if that scenario seems distant.

“Lenders will always work with borrowers to try to help them through the inevitable periods of difficulty that life may throw at them, such as periods of unemployment, illness or relationship breakdown.”

Commenting on the figures, Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “This is positive news, but we also need to recognise that, what with everything that’s currently occurring in terms of political and economic climate, borrowers do need to factor into their household budgets that interest rates will, at some point in the future, move upwards.”

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Written by: Houseladder