The value of UK residential mortgages in arrears jumped in the three months to June to the highest level in seven years while mortgage loans fell by the largest amount on record, according to a Bank of England report on Tuesday.
Source: Bank of England
In the second quarter, outstanding balances in arrears, borrowers failing to make payments equal to at least 1.5% of the outstanding balance, or where the property is in possession, increased by 28.8% compared with the same period last year, to £16.9 billion, the highest since the third quarter of 2016.
The BoE said the outstanding value of all residential mortgage loans fell from the previous quarter by £19.9 billion, or 1.2%, to £1.66 trillion, the biggest fall in absolute and percentage terms since reporting began in 2007.
The rise comes ahead of a widely expected increase in interest rates by the Bank of England at its next meeting.
Myron Jobson, senior personal finance analyst, interactive investor, said the figures "paint a of picture of a disjointed mortgage marketplace reeling from spiralling repayment costs."
"Although the outstanding value of all residential mortgage loans was marginally higher at the end of 2023 Q2 compared to a year earlier, it represented the largest decrease on the previous quarter since reporting began in 2007," Jobson noted.
“High mortgage rates continued to dampen enthusiasm for property in Q2, with gross mortgage advances and new mortgage commitments at their lowest observed levels since the second quarter and the third quarter of 2020, respectively," Jobson added.