Homeowner arrears continue to fall yearly, whilst Buy-to-let arrears rise marginally

According to data released from the trade body, there were 73,580 homeowner mortgages in arrears in the second quarter of 2020, down by 3% on the same quarter last year.

However, when compared to last year, there was a small increase in levels among buy-to-let landlords. It was reported by UK Finance that there were some 5,000 buy-to-let mortgages in arrears of 2.5% or more. This comprises of an increase of 6% from 2019. Within those figures, 1,270 buy-to-let mortgages were in arrears of at least 10% of the outstanding balance, up by 5% year-on-year.

The number of properties repossessed remains extraordinarily small, as a result of the government mortgage holiday scheme. Just 90 homeowner mortgaged properties were repossessed by lenders over the quarter, down by 93% on the second quarter last year. The majority of repossessions also took place in March, before the mortgage holiday scheme was implemented.

Mortgage arrears are over due payments, including tacked on interest, and fees, which can quickly surmount. An arrear is the amount that you need to pay to catch your payment up so your mortgage is current. Arrears can lead to repossession if a deal is not agreed upon by borrower and lender. Repossessions typically cause added financial hardship and make it much more difficult to obtain another mortgage down the line, even if one’s financial situation improves.

Industry experts expect the government mortgage scheme to help curtail the number of repossessions, as homeowners slowly start to get back to normal life after lockdown. This could be good news for borrowers as more mortgage providers are eager to take advantage of the housing market beginning to recover after COVID-19.

As home viewings in July and August saw a sharp increase compared to the 2nd quarter of this year, things are looking good for the housing market and borrowers and lenders alike. With more business on the way the industry looks set to get back on its feet as many rush to take advantage of the government aid offered to help lessen the blow of lockdown.

When looking to begin the process of a mortgage, industry experts suggest procuring the help of an experienced mortgage brokerage service to help find the best deals in the current climate. Speaking with an experienced broker can also be of great help to those facing arrears or repossession, as a broker may be able to help work out a suitable solution between lender and borrower.

Contact us today to find out if you could save money on a better mortgage deal.