UK Finance’s latest arrears and possessions data shows a modest increase (3%) in homeowner mortgages in arrears to 96,580 in Q1 2024, compared with Q4 2023.

This was driven by the continued impact of cost of living pressures and higher interest rates.

The number of BTL properties in arrears remained the same as the previous quarter at 13,570.

The overall proportion of mortgages in arrears remains low, at 1.11 per cent of homeowner mortgages and 0.69 per cent of BTL mortgages.

Homeowner and BTL properties in early arrears fell by two per cent and 11 per cent respectively. In part, this reflects mortgages in this early band moving into deeper arrears positions. But it also points to fewer customers moving into this band and suggests we’ll see a limited increase in arrears cases for Q2 2024.

For comparison, the number of homeowner and BTL mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600 – almost twice the 110,150 seen in the first quarter of this year.

While the percentage of mortgaged properties taken into possession has risen, this is largely due to historic arrears cases now working through the court system.

UK Finance director of mortgages Charles Roe commented: “The number of mortgages in arrears, while still low, continues to rise as households remain under pressure from the cost of living and higher interest rates.

“Lenders offer a range of support to anyone worried about their finances, with teams of trained experts ready to help.”

Commenting on the UK Finance data, Perenna chief executive Arjan Verbeek said: “The relentless rise in arrears is another worrying reminder of the instability homeowners are facing. Soaring interest rates and increasing costs have put immense pressure onto millions of households. It’s clear the mortgage market needs reform so people have more choice with respect to the interest rate risk they take on. Reform that we need to enact now.”