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Buy-to-Let Mortgage Arrears Hold Steady Despite Economic Pressures

UK Finance’s latest arrears and possessions data for Q1 2024 reveals a mixed landscape for mortgages, with a notable focus on the buy-to-let sector maintaining stability despite broader economic challenges.

Buy-to-Let Arrears
The report indicates that the number of buy-to-let properties in arrears remained unchanged from the previous quarter, holding steady at 13,570. This stability is highlighted against the backdrop of rising homeowner mortgage arrears, which saw a 3% increase, bringing the total to 96,580. Charles Roe, Director of Mortgages at UK Finance, noted, “The number of mortgages in arrears, while still low, continues to rise as households remain under pressure from the cost of living and higher interest rates.”

Early Arrears Decline
Interestingly, both homeowner and buy-to-let properties in early arrears have seen a decrease, with a 2% drop for homeowners and an 11% dip for buy-to-let mortgages. This suggests that while overall arrears are climbing, early interventions or improved management may be helping to curb the progression of these cases.

Comparative Arrears and Possessions Data
Despite the rise in arrears, the overall proportion remains relatively low at 1.11% for homeowner mortgages and 0.69% for buy-to-let mortgages. For context, these figures are significantly lower than the peak seen during the global financial crisis in Q1 2009, where arrears numbers reached 209,600. The possession numbers also reflect a downward trend, with only 1,470 homeowner and buy-to-let mortgaged properties possessed in Q1 2024, a 26% decrease compared to Q1 2019, pre-pandemic levels.

This data underscores the resilience of the buy-to-let sector, which appears to be weathering current economic challenges better than the homeowner mortgage market, maintaining stability in arrears even as broader financial pressures mount.