The latest Mortgage Lending data from the Bank of England and FCA shows that in Q4 2024, the outstanding value of all residential mortgage loans increased by 0.5% from the previous quarter to £1,678.2 billion, the highest stock of outstanding mortgage loans since reporting began in 2007 and was 1.3% higher than a year earlier.
The value of outstanding mortgage balances with arrears increased from the previous quarter to £22.1 billion and was 8.4% higher than a year earlier. However, the proportion of the total mortgage loan balances with arrears relative to all outstanding mortgage balances has remained stable at 1.3% compared to the previous quarter, marking only a slight 0.1pp increase from a year earlier.
Encouragingly, new arrears cases as a proportion of total outstanding balances with arrears, while increasing by 2.3pp from the previous quarter to 12.0%, remained 1.5pp lower than the same quarter in the previous year. Additionally, the number of new possessions in Q4 2024 decreased by 0.8% from the previous quarter to 2,057.
Tom Cuppello, Director, Risk, at leading independent financial services consultancy Broadstone, commented: “The final quarter of 2024 saw total outstanding mortgage loans reach a record high, but despite this, the proportion of mortgage loans in arrears has remained relatively stable.
“While there has been an increase in the absolute value of arrears, the fact that new arrears cases remain lower than the same period last year and possessions have slightly declined suggests that financial pressures, while still present, may be less acute than before.
“However, despite easing mortgage rates and a rush to complete property purchases ahead of tax changes in April contributing to record mortgage lending, households are still facing historically high rates and cost-of-living challenges.
“The Bank of England is expected to lower interest rates gradually in 2025, while upcoming tax rises in April and ongoing macroeconomic and geopolitical uncertainties still present potential headwinds. Given these factors, it will be crucial for lenders to balance their approach, ensuring they support customers while navigating evolving financial conditions.”
