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.
Please use Chrome browser for a more accessible video player
Starmer and Sunak clash over mortgages
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.
Please use Chrome browser for a more accessible video player
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
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
Read more money news:
Something for everyone in latest economic data
Claire’s falls into administration
Lola’s Cupcakes bakes £30m takeover by Finsbury Food
Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike