Jump in mortgage arrears and 11% rise in buy-to-let repossessions
There has been a jump in the number of properties falling behind with mortgage payments, according to industry figures that also show an 11% rise in repossessions of buy-to-let (BTL) properties.
UK Finance said cost of living pressures and higher interest rates continued to take a toll on borrowers over the final three months of 2023, with the numbers falling behind with payments rising in line with its forecasts.
Its data showed that homeowner mortgages in arrears increased by 7% to 93,680 compared to the previous quarter.
Buy-to-let (BTL) mortgages, also adjudged to be more than 2.5% behind the outstanding balance of the loan, rose by 18%.
UK Finance said while 540 homeowner-mortgaged properties were taken into possession in the period, a fall of 14%, there was an increase to 500 in the BTL category.
The body said such volumes were low compared to historical standards.
Separate figures from the Ministry of Justice showed that mortgage possession claims rose by 39% to 4,384 over the three months compared to the same period last year.
There was a 9% rise in orders being granted to 2,702 but a 19% decrease in repossessions by county court bailiffs.
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Research from the debt charity StepChange, also released on Thursday, suggested that one in four mortgage holders had used credit to afford mortgage payments over the past 12 months.
Borrowing costs have risen since December 2021 when the Bank of England made its first move to tackle inflation, which had surged as economies got back in gear after COVID pandemic restrictions were eased.
The central bank, however, went on to raise the Bank rate a further 13 consecutive times in a bid to tackle elements of the cost of living crisis that followed Russia’s invasion of Ukraine.
It has held off on further rate hikes since last summer based on growing evidence its work to date is having the desired effect.
Bank of England governor Andrew Bailey told Sky News last week that he believed the next interest rate movement would be downwards but expressed doubt that it was imminent because inflation, while significantly slowed, remained stubborn.
Latest data on mortgage rates from the financial information service Moneyfacts showed average fixed-rate deals, covering both two and five-year terms for both residential and BTL customers, still above 5%.
They had stood at around 6.5% last summer.
The easing has been largely attributed to the lack of further Bank of England intervention.
UK Finance said of the outlook for borrowing costs: “In recent months, mortgage rates have been falling.
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Mortgage stats reflect falling rates
“This will help ease the payment shock for the 1.5 million homeowners and 230,000 BTL mortgage holders whose fixed-rate deals are due to end this year.
Lender stress tests have also helped ensure that borrowers are able to keep up with their mortgage payments, even when their interest rates rise above those in place when they first took out their mortgages.
“However, we know that other factors outside the control of lenders can also impact customers’ ability to manage their mortgage payments, so we would encourage anyone worried about their finances to reach out to their mortgage lender at the earliest opportunity to discuss the options available for their circumstances.”
Alastair Douglas, the chief executive of TotallyMoney, said of the data: “The latest figures show that more and more homeowners and landlords are falling into arrears, and we can expect the trend to continue as 1.7 million cheap fixed-rate deals come to an end this year.
“If you’re somebody who’s struggling, contact your lender and ask for support – and remember this won’t impact your credit rating.
“However, missed payments can – and they could stay on your credit file for up to six years. If these persist, you might end up in mortgage arrears, leading to court action and even repossession.
“Banks need to be more proactive in issuing this support, and must reach out to people who they think might be in difficulty. Otherwise, we won’t just be looking at a mortgage crisis, but a mental health one too.”
Business
Energy bills to rise again from January but spring falls to come, research firm Cornwall Insight forecasts
Energy bills are to rise again next year, according to a respected forecaster.
Costs from January to March are projected to rise another 1% to £1,736 a year for the average user, according to research firm Cornwall Insight.
The energy price cap, which sets a limit on how much companies can charge per unit of electricity, is also expected to rise, costing typical households an extra £19 a year.
It’s a further increase after energy costs rose 10% from October.
After the latest hike, there were hopes of a fall in the new year, but volatile wholesale gas and electricity markets are still above historic average costs.
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Prices have gone up due to supply concerns arising from Russia‘s war in Ukraine, and maintenance of Norwegian gas infrastructure.
But spring is expected to herald a reduction as is October 2025, Cornwall Insight said.
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Every three months energy regulator Ofgem revises the cap based on wholesale costs.
The official January price cap announcement will be made on Friday.
It comes as millions of pensioners lost their automatic winter fuel allowance payment after the government means-tested the benefit.
Meanwhile, Cornwall Insight’s principal consultant Dr Craig Lowrey warned “millions” of households won’t heat their homes to “recommended temperatures, risking serious health consequences” with bills on the rise.
“With it being widely accepted that high prices are here to stay, we need to see action,” he said, suggesting options like cheaper rates for low-income homes, benefit restructuring, or other targeted support for the vulnerable “must be seriously considered”.
The energy price cap system is being reviewed by Ofgem with possible changes to the standing charge coming over the next year.
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The long-lasting solution to high energy bills is the transition to UK-produced renewable power, the firm said.
“While there will be upfront costs, this shift is essential to building a sustainable and secure energy system for the future.”
The owners of Scotland’s only oil refinery have rejected a US-led approach about a possible bid for it months before its scheduled closure.
Sky News has learnt that a consortium said to be led by Robert McKee, an American energy industry veteran, wrote to Petroineos, the owner of the Grangemouth site, to express an interest in buying it.
The approach, which is understood to have been made earlier this month, was rejected by Petroineos, which is 50%-owned by the petrochemicals empire founded by the Manchester United FC shareholder Sir Jim Ratcliffe.
The consortium is understood to comprise The Canal Group, which is reportedly developing a green energy refinery in Texas, and Trading Stack, a Middle East-based commodities trader.
Mr McKee spent nearly four decades with ConocoPhillips, one of the biggest energy companies in the US.
Sources close to the situation said that Petroineos had rebuffed the offer in order to concentrate on a publicly announced plan to transform the century-old plant into a finished fuels import terminal.
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They added that the nature of the consortium’s approach had raised questions about its access to financing and expertise in operating an asset of this kind.
The Grangemouth refinery, which employs about 450 people, loses about £200m annually.
Its other shareholder is the state-backed Chinese energy giant PetroChina.
The site is due to close next year.
A person close to the consortium insisted that its financing was robust and said it would assess the feasibility of building a new refinery elsewhere in the area.
They added that the consortium had had “positive interactions” with trade union officials, and believed that there was scope to rapidly make Grangemouth’s refinery operations profitable.
On Monday, a spokesman for Petroineos said: “Since the Petroineos joint venture was formed 13 years ago, our shareholders have invested nearly £1bn in the refinery, only to absorb losses of £600m.
“Last week, the refinery lost £385,000 on average each day and we expect to lose more than £150m in total during the course of this year.
“We have not received any credible or viable bids for the refinery.”
A spokesman for the consortium declined to comment.
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