Laura Suter, head of personal finance at AJ Bell, comments on the latest mortgage arrears figures:
“Higher interest rates mean more homeowners are now in arrears with their mortgage, with the number rising by 18% over the past year. The latest figures show almost 88,000 homeowners were in arrears in the third quarter this year, an increase of almost 13,500 on a year earlier.
“These figures also only classify homeowners as behind on their mortgages if they owe more than 2.5% of the mortgage value in arrears – for a £400,000 mortgage that would mean they were £10,000 behind on their payments. Because of this classification it’s likely there are far more people who are slightly in arrears and could appear in the figures in coming months.
“It’s reassuring that arrears remain low by historical levels, and the current Mortgage Charter that lenders have signed up to is preventing these numbers from rising further. The agreement means that those struggling to pay their mortgage can switch to interest only, make part-payments or extend their term. However, these are all temporary measures and, as we’re not expecting interest rates to fall any time soon, at some point these homeowners will have to face the reality of higher rates – meaning many will fall into arrears.
“Anyone who is struggling to pay their mortgage or thinks they will struggle in the near future should approach their lender as soon as possible. You can get help and guidance on your options without it impacting your credit file.”
