Arrears are low, but we could see a shift as a result of rate rises and rise in high loan to income lending

Mark Pilling, Spicerhaart Corporate Sales managing director, says “The latest mortgage lenders and administrators statistics reveal that the proportion of total loans in arrears has continued to fall with the outstanding balance in arrears now £14.3 billion, compared to £14.8 billion in Q1 2018. And while this is positive, there is a danger we could see this trend start to shift over the next few months.

“As the base rate rise last month starts to affect people’s monthly payments – and with another rate rise on the cards before the end of the year- there is a danger that people could start to struggle with higher monthly mortgage payments.

“While the vast majority of new mortgages are fixed rate deals, so won’t be affected by rate rises, around half of all mortgage owners – around 4 million people – are on either variable rates or trackers. Many of these borrowers will have got used to managing their finances around historically low rates, and could now be worrying about their affordability.

“The stats also show that the number of high loan to income and 90% LTV loans have both increased, which means there are potentially more borrowers pushing themselves to their financial limits, which could affect their ability to pay if their circumstances change.

“Repossession should always be the last resort, so it is important that lenders continue to look at all the cases on their books and find ways to help any borrowers who are either already having difficulties managing their mortgage, or have concerns that affordability could become an issue down the line.”