Mortgage arrears and possession rates falling

The number of mortgages in arrears of 2.5% or more of the outstanding balance fell during the second quarter of 2017.

This is according to UK Finance, which also reports that the number of possessions also dropped during this period.

Some 88,200 mortgages were in arrears of 2.5% or more during Q2 - the lowest level recorded by UK Finance since records began in 1994.

The total was 5% lower than Q1's 92,600, amounting to just 0.8% of the 11 million-plus mortgages outstanding in the UK.

Meanwhile, the number of properties taken into possession declined during Q2, falling from 1,900 to 1,800 and accounting for just 0.02% of all mortgages.

The total was the same as in the final quarter of last year, and is the lowest figure since quarterly data was first published in 2008.

When it comes to the buy-to-let market, UK Finance reports that the rate of buy-to-let arrears was lower than that in the owner-occupied sector, although the buy-to-let possession rate was higher.

The reason for this is lenders extend a high level of forbearance to owner-occupiers to help them overcome any period of financial difficulty and stay in their homes wherever possible.

UK Finance says this is now an established trend in recent data sets. 

“These figures show that the overwhelming majority of borrowers are managing their mortgage payments successfully, and many of those who have experienced some difficulty in the past are able to recover their financial position," says Paul Smee, head of mortgages at UK Finance.

“Borrowers are being helped by low interest rates, but mortgage costs are certain to rise at some stage. It is important therefore for customers to plan ahead and consider how their finances would be affected in those circumstances," he adds.