The total amount of overdue mortgages soared to £20.3 billion during the last quarter of 2023, marking a steep 50.3% increase compared to 2022.
This figure was significantly lower the previous year, at £13.5 billion, highlighting the financial struggles faced by homeowners.
Lending costs have jumped significantly due to the Bank of England hiking the base interest rate from 2.25% at the end of 2022 to 5.25% by the end of 2023.
Karen Noye of Quilter, a mortgage specialist, observed that the surge in mortgage rates over recent years is severely impacting some borrowers, forcing them into arrears as they struggle with the increased repayments.
Noye also mentioned that the recent adjustments to National Insurance and Child Benefit would offer minimal relief as many are dealing with mortgage payment increases of £300 or more each month.
Despite the alarming figures, the percentage of loans with overdue payments remains relatively low at 1.23%.
Simon Gammon from Knight Frank Finance commented on the housing market’s resilience despite the hike in borrowing costs. He attributed much of this strength to the leniency of lenders that has reduced the number of forced sales.
He noted, though, that even if borrowing costs are expected to decline in the upcoming summer, the situation remains challenging for several borrowers.
Gammon advises those worried about their ability to meet mortgage payments to get in touch with their lenders sooner rather than later to explore potential solutions like switching to interest-only repayments or lengthening the term of the mortgage to ease the financial strain.
