Bank of England issues warning to homeowners over mortgages

Samantha Leathers
·2-min read
Cut up credit cards on final notice warnings
-Credit: (Image: Getty)


More Brits are behind on their mortgages than any time in the last seven years as the Bank of England’s latest data reveals the devastating consequences of the last few years. Combined with the financial strain of the pandemic still lingering and the staggering cost of living rises, more and more people are struggling to make ends meet for essentials let alone debts.

The report covering the first quarter of 2024 revealed mortgage balances with arrears increased by 4.2 percent compared to the previous quarter, holding a monetary value of £21.3billion. This is also a jaw-dropping 44.5 percent increase from a year earlier.

Additionally, the proportion of total loan balances with arrears relative to all outstanding balances increased from the last quarter from 1.23 percent to 1.28 percent. This is now at the highest level since the final quarter of 2016.

On a more optimistic note, the report also revealed that the outstanding value of all residential mortgage loans decreased by 0.1 percent from the previous quarter. This saw it falling 1.4 percent compared to a year ago with the total monetary value of outstanding mortgages currently sitting at £1,654.9 billion.

A borrower falls into mortgage arrears when they miss their mortgage payments, which is also recorded on their credit file. Missing multiple payments can result in the property being repossessed but there is help available for those struggling to stay ahead of their debts.

Money Saving Expert assured Brits that mortgage lenders usually turn to repossession only as a “last resort” and that the organisations would much rather “prefer you to repay”. Major lenders won’t repossess a home until at least 12 months after the first missed payment and the borrower doesn’t appear to make any effort to resolve their financial shortcoming.

Repossessing a home usually sees lenders putting the property up for auction to get a quick sale. However, if the price it wins at auction doesn’t cover what is owed on the mortgage, borrowers may still find the lender on their tail to recuperate the rest.

Because of this, MSE advised homeowners look at selling the property themselves, which can get them a far better price if they have enough time. Additionally, this will stop a repossession being registered against the borrower which could affect their changes of getting future mortgages.

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