UK mortgage arrears jump in Q3 as higher rates bite

The number of mortgages in arrears increased in the third quarter of 2023, with buy-to-let (BTL) mortgage holders suffering the worst, according to figures out Thursday by UK Finance.

Between the July to September period, there was a total of 99,470 mortgages in arrears – defined as when arrears reach 2.5% of the outstanding balance – up from 90,880 in the second quarter.

According to UK Finance stats, this was the highest level of mortgages in arrears since late-2016.

Homeowner mortgages made up 87,930 of that number, rising 7% on the previous quarter, but BTL mortgages in arrears increased by 29% to 11,540.

UK Finance said the increases were a result of both cost-of-living pressures and higher interest rates.

"In particular, interest rate pressures are felt more acutely in the BTL sector, where landlords may not be able to raise rents to cover the increases in their payments," the trade association said.

Some 630 homeowner mortgaged properties were taken into possession in the third quarter, down 9% on the second quarter, while the number of possessed BTL mortgage properties was unchanged at 450.

Data also released on Thursday by the Ministry of Justice showed that claims by landlords trying to repossess properties from tenants rose to 24,938 in the third quarter, up from 22,526 in the second quarter.