There were 76,630 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2023, 2% greater than in the previous quarter, according to the latest data from UK Finance.

Within the total there were 27,700 homeowner mortgages in the lightest arrears band (representing between 2.5% and 5% of the outstanding balance – 5% greater than the previous quarter.

There were 7,030 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in first quarter of 2023 – 16% greater than in the previous quarter.

The UK Finance data shows that 410 buy to let properties were taken into possession in the first quarter of 2023, 28% greater than in the previous quarter.

Phoebus Software, chief revenue officer Adam Oldfield  says the figures from UK Finance this morning bear out the fact that increasing interest rates coupled with the rising cost of living is taking its toll.

“Unfortunately, with around 370,000 borrowers coming off fixed rate deals between April and June (ONS), the likelihood is that this trend will continue and is almost certainly going to get worse.  This is especially true if, as many expect, the Bank of England continues to put the base rate up.

He adds: “Once again there will be a great responsibility for lenders to identify borrowers that may be getting into difficulty and manage the situation with care.

“With Consumer Duty rules coming into force at the end of July that responsibility becomes more onerous, and every lender will need to ensure they have all their systems aligned to ensure the best outcomes for their borrowers.”