Number of home owners’ properties being repossessed jumps by 10%

The number of home owners’ properties being repossessed jumped by 10% in the first quarter of 2019 compared with a year earlier, figures from a trade association show.

Meanwhile, more buy-to-let landlords are also getting into arrears with their mortgage.

UK Finance said 1,380 home owner mortgaged properties were repossessed in the first quarter of 2019, 10% more than in the same quarter of the previous year – but still well below the levels seen between 2009 and 2014.

Its report said the increase in repossessions has been driven in part by a backlog of older cases which are being processed in line with the latest regulatory requirements.

UK Finance said: “Lenders continue to show flexibility to borrowers in financial difficulty and possession is always a last resort.”

Low mortgage rates have been helping to keep borrowers’ mortgage repayments relatively affordable.

Despite more home owner repossessions being recorded, fewer home owners were found to be in arrears on their mortgage in the first quarter of 2019 compared with a year earlier.

There were 76,580 home owner mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2019, 4% fewer than in the same quarter of 2018.

Within the total, 23,520 home owner mortgages had more significant arrears, representing 10% or more of the outstanding balance.

This was 3% fewer than in the same quarter of 2018.

UK Finance said the proportion of homeowner mortgages in arrears remains at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month.

Looking at buy-to-let mortgages, there were 4,620 loans in arrears of 2.5% or more of the outstanding balance in the first quarter of 2019, 3% more than in the same quarter of the previous year.

Within the total, there were 1,200 buy-to-let mortgages with more significant arrears amounting to 10% or more of the outstanding balance. This was 12% more than in the same quarter of the previous year.

UK Finance said: “While we are seeing mixed signs in buy-to-let arrears, these do not indicate a clear increasing trend at this stage.

“Additionally, increases are small and from a low base.”

Some 570 buy-to-let mortgaged properties were repossessed in the first quarter of 2019, a 14% fall compared with the same quarter of the previous year.

Jonathan Harris, director of mortgage broker Anderson Harris, said borrowers should plan ahead for possible future increases in interest rates.

He said: “Long-term fixed-rate mortgages continue to be popular as they are competitively priced and enable borrowers to gain certainty and help with budgeting.”

Mr Harris said: “Repossession is devastating and any borrowers struggling to repay their mortgage should keep their lender in the loop.

“Lenders are being flexible and showing forbearance but it is much easier and less stressful to come up with solutions early on than further down the line when options may be much more limited.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), suggested pressures from recent tax changes for landlords, which have eaten into their profits, may partially explain why more are falling behind with their mortgage payments.

He said: “The softening in the housing market is reflected in these figures, particularly for buy-to-let landlords who are falling into arrears from the pressure of tax and regulatory changes, as we might have expected.

“These figures also show that there is little appetite among lenders to repossess because they are not going to do too much better than the owners themselves in achieving a sale at a reasonable price.”

Shaun Church, director at mortgage broker Private Finance said it was an “encouraging sign” to see many borrowers continuing to keep on top of their payments.

He said: “This should instil confidence and promote further innovation and flexibility across the mortgage market.”