The number of households falling into arrears continued increasing in the first quarter as rising interest rates continued to hit borrowers.
According to figures from industry body UK Finance, arrears picked up in the first quarter with mortgages in arrears of more than 2.5 per cent reaching 76,630. This was a two per cent increase on the previous quarter.
Of this, 27,700 mortgages were in the lightest arrears category, between 2.5 and five per cent, up five per cent on the previous quarter.
UK Finance’s director of economic insight and research Lee Hopley said the increase in arrears reflected “the increased cost-of-living weighing on households’ incomes”.
The figures reinforce recent Financial Conduct Authority data that showed arrears increasing in the last quarter of 2022 for the first time since early 2021.
Repossessions also jumped 50 per cent in the first quarter, with 750 homeowner mortgaged properties repossessed.
In addition, 410 buy-to-let mortgaged properties were taken into possession, 28 per cent higher than the previous quarter.
But Hopley said the figures were still relatively low. “While the number of repossessions increased, it’s important to note that this is from a very low base as historic cases make their way through the courts,” he clarified.
“The total number of possessions remains significantly below the levels seen prior to the pandemic,” he said.
The figures suggest that borrowers are increasingly feeling the pain of the Bank of England’s rate hikes.
In an attempt to combat spiralling inflation, the Bank has hiked interest rates 12 times in a row. Yesterday Andrew Bailey said that the UK was suffering from a wage-price spiral raising the prospect of further rate hikes.