UK Finance has just published its mortgage arrears & possessions update for Q2 2023, showing, among other things, that there were 8,980 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 28 per cent greater than in the previous quarter.
There was 81,900 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, 7 per cent greater than in the previous quarter.
Free UK newswire, Newspage, sought the views of brokers and property experts, Stephen Perkins, Managing Director at Yellow Brick Mortgages said, “This research and data are showing that the hikes in the base rate by the Bank of England are pushing more homeowners into arrears now that the impact of the rate increases is starting to trickle through as more borrowers come off their low fixed rates.
“Tenants struggling with keeping up with rent is no surprise given the challenges across all their household costs from food and energy meaning something has to give.
“There are further challenges for landlords with their increased cost of buy-to-let mortgages and rent being missed by tenants.”
Joe Stallard, Director and Advisor at House and Holiday Home Mortgages said, “The struggles continue for landlords. In fact, it’s downright brutal. Though the numbers are still relatively small, the rise in properties being taken into possession is a worrying sign, even if not entirely surprising given recent legislation changes that have come down hard on landlords.
“We mustn’t forget the knock-on effect this has on tenants. Punishing landlords this harshly will reduce the amount of good quality rental property available, which will increase rents and competition for those that don’t want to, or can’t yet, buy.”
Lewis Shaw, Owner and Mortgage Expert at Shaw Financial Services said, “This is a sign of the times, and it’ll continue to get worse throughout 2024 as more than 1.4 million households will face remortgaging at much higher rates than anyone has been used to for well over a decade.
“You can’t jack up interest rates at the speed we’ve seen over the past 18 months and not cause households to sink below the waterline. Thankfully the Mortgage Charter will give some light relief for owner-occupiers, however the buy-to-let market seems to be dead in the water already.”