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Surge in Buy-to-Let Mortgage Arrears, UK Finance Reports

UK Finance, the representative body for over 300 firms in the banking and finance industry, has recently disclosed alarming data concerning mortgage arrears for Q2 2023.

The data highlights a substantial 41% increase in buy-to-let mortgage arrears, specifically in the range of 2.5% to 5% of the balance. By the close of Q2 2023, mortgages in arrears made up 0.93% of all outstanding homeowner mortgages and 0.44% of all outstanding buy-to-let mortgages.

Breaking it down further, 8,980 buy-to-let mortgages showed arrears of 2.5% or more of the outstanding balance, reflecting a 28% spike from the previous quarter. Of these, 4,810 buy-to-let mortgages fell into the lightest arrears bracket, between 2.5% and 5% of the outstanding balance, marking a 41% rise from the last quarter.

On the homeowner front, 81,900 mortgages ended Q2 in arrears of 2.5% or more of their outstanding balance. This was a 7% increment from the preceding quarter. Notably, 30,940 of these homeowner mortgages were within the lightest arrears category, indicating a 12% increase from the last quarter.

In terms of property possessions, 610 homeowner-mortgaged properties were reclaimed in Q2, showcasing a decline of 19% from the previous quarter. Conversely, 440 buy-to-let mortgaged properties were acquired, reflecting a 7% rise from the last quarter.