Repossessions rise 50% in first quarter with big rise in buy-to-let

Repossessions are starting to rise as the cost-of-living crisis continues to put the squeeze on household finances and would-be homeowners are forced to throw in the towel, latest figures from lender trade body UK Finance reveal.

Some 750 homeowner mortgaged properties were taken into possession in the first quarter of 2023, 50% greater than in the previous quarter and 410 buy-to-let mortgaged properties were taken into possession in the first quarter of 2023, 28% greater than in the previous quarter.

ARREARS

Overall, there were 76,630 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2023, 2% greater than in the previous quarter.

UK Finance says: “Given increases in the cost of living, rising interest rates and the end of wholesale government support for energy bills, we are seeing an increase in the number of households in early arrears.”

But the trade body adds: “This should not be a cause for panic. Over the last year, lenders have helped nearly 200,000 borrowers who cannot meet their full mortgage payment by providing tailored forbearance.”

CRUSHING

Samuel Mather-Holgate, Managing Director of Swindon-based advisory firm Mather & Murray Financial, says: “This data will come as a crushing blow to the Financial Conduct Authority and the Bank of England.

“If anyone was considering how the affordability stress tests worked, it is now abundantly clear they don’t when rates rise this quickly.

“The Bank of England should be ashamed of itself for creating the misery we are seeing and the crisis that is developing.”

Adam Oldfield, chief revenue officer at Phoebus Software, adds: “Unfortunately, with around 370,000 borrowers coming off fixed rate deals between April and June the likelihood is that this trend will continue and is almost certainly going to get worse. 

“This is especially true if, as many expect, the Bank of England continues to put the base rate up.”