The latest market analysis from London lettings and estate agent, Benham and Reeves, has shown that more homeowners are finding themselves in arrears when it comes to their mortgage, with the number hitting its highest since the start of 2019 having seen an 18.2% jump in the last year alone.

Benham and Reeves analysed the latest data from the Bank of England for Q3 of this year, looking at the number of homeowners who have fallen into mortgage arrears of over 2.5% of their outstanding balance.

The figures show that 87,930 homeowners fell into mortgage arrears during the third quarter of this year.

LIS Show – MPU

This marks a 7.4% increase versus Q2 of this year and an 18.2% year on year jump. It’s also the highest quarterly total seen since the start of 2019.

Having previously peaked at a quarterly total of 84,010 in Q1 of 2021, the number of homeowners falling into arrears on their mortgage had been in slow decline falling to 74,420 in the third quarter of 2022.

At the time, interest rates had already started to climb from the record low of 0.1% seen at the back end of 2021, however, they still remained below 2% come the end of September 2022.

Since then the base rate has climbed to 5.25% and it’s clear that this increase in the cost of borrowing has had a direct impact on the number of homeowners falling into mortgage arrears.

In fact, the number of homeowners in arrears has climbed consistently every quarter since to the current peak of 87,930.

What’s more, so has the percentage of total homeowners loans they account for. Today, the number of homeowners in mortgage arrears account for 1% of all total loans outstanding, having also increased every quarter since Q3, 2022.

Director of Benham and Reeves, Marc von Grundherr, commented:

“Not only have households had to struggle with the high cost of living, but they’ve also had to contend with the sharp hike in interest rates seen over the last year which has pushed the cost of their mortgage repayments up significantly.

With many already stretched to breaking point with respect to their household finances, it’s no surprise that the number of homeowners falling into arrears on their mortgage has climbed so significantly.

The good news is that rates have since been held and while this certainly won’t reduce the cost of borrowing, it should help stem the increasing number of arrears seen in the last year. For those looking to invest, the current landscape is also likely to offer a greater number of deals.

For those who do find themselves falling into arrears, the first step should always be talking to your mortgage provider.

It’s simply not beneficial for either party to reach the point of repossession and they will always try to help where they can to ensure your repayment plan is manageable.”

Arrears 2.5% or more of mortgage balance (All arrears of over 2.5% of balance)
Period Homeowners arrears number Total homeowner loans outstanding Homeowners arrears %
2019 Q1 83,870 9,010,000 0.93%
2019 Q2 80,420 9,020,000 0.89%
2019 Q3 76,110 8,990,000 0.85%
2019 Q4 75,430 9,020,000 0.84%
2020 Q1 77,090 9,000,000 0.86%
2020 Q2 79,710 8,970,000 0.89%
2020 Q3 79,900 8,960,000 0.89%
2020 Q4 82,610 8,980,000 0.92%
2021 Q1 84,010 8,980,000 0.94%
2021 Q2 82,380 8,990,000 0.92%
2021 Q3 80,360 8,980,000 0.89%
2021 Q4 79,640 8,960,000 0.89%
2022 Q1 75,700 8,940,000 0.85%
2022 Q2 75,000 8,930,000 0.84%
2022 Q3 74,420 8,920,000 0.83%
2022 Q4 75,170 8,890,000 0.85%
2023 Q1 76,620 8,840,000 0.87%
2023 Q2 81,880 8,800,000 0.93%
2023 Q3 87,930 8,760,000 1.00%
Q change 7.4% -0.5% 0.07%
Annual change 18.2% -1.8% 0.17%
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