UK mortgages in arrears hit a seven-year high in the final quarter of 2023, according to data from the Bank of England.
The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, has increased over the last quarter of 2023 to its highest level in seven years, research from the Bank of England has revealed.
The BoE's Mortgage Lenders and Administrators Statistics: 2023 Q4, found the proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, rose to 1.23 per cent in Q4 2023.
This was an increase on the 1.12 per cent recorded in the previous quarter.
This represented the highest proportion of loans in arrears since the final quarter of 2016.
The data found the value of outstanding mortgage balances with arrears increased to £20.3bn over the last quarter, an increase of 50.3 per cent compared to the same quarter the year before.
This also represented an increase of 9.2 per cent when compared with the previous quarter.
This was despite the number of new arrears cases decreasing by 2.6 percentage points compared to the previous quarter, falling to 13.2 per cent of the total outstanding mortgage balances with arrears.
Henchurch Lane Financial Services mortgage broker, Denni Tyson, said the data came as “no surprise” given the “mortgage shock” being felt by many households across the UK.
“A decade and a half of cheap borrowing has had a huge effect on certain households and placed them under a lot of pressure now that rates have risen,” he explained.
The bank also found the outstanding value of all residential mortgage loans decreased by 0.1 per cent when compared to the previous quarter,
This decrease led to the outstanding value to reach £1,657.6bn, 1.1 per cent lower than a year earlier when it was £1,674.9bn.
It also detailed that gross advancements reached £54bn in the final quarter of 2023 and new commitments reached £46bn.
Both of these figures represented decreases on the quarter before as, in Q3 2023, gross advancements was £62.3bn, meaning Q4 2023 experienced a 13.4 per cent fall, and new commitments were £49.2bn, representing a 6.6 per cent decrease.
The disparity in figures was even more pronounced when compared with the previous year as in Q4 2022 gross advancements was £81.6bn, 33.8 per cent higher than 2023, and new commitments were £58.3bn, a 21.2 per cent difference.
Tyson concluded: “The housing market desperately needs some stability and a boost, otherwise, the figures in the next report will be an even worse read.”
tom.dunstan@ft.com
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