Mortgage arrears on the increase

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The number of people struggling to keep up with their mortgage increased for the first time in two years during the final quarter of 2010, figures show.

Around 38,800 homeowners got into mortgage arrears during the three months, 6 per cent more than during the third quarter and the first increase since the final quarter of 2008, the Financial Services Authority (FSA) said.

But despite the rise in new cases, the total number of people who were in arrears of at least 1.5 per cent of their outstanding mortgage fell for the eighth consecutive quarter to 343,400, 7 per cent down on the same period of 2009.

Just under 6 per cent of these borrowers have reached an agreement with their lender under which they are making only partial repayments, or their repayments have been temporarily suspended altogether.

A further 13,764 homeowners also collectively had £40m of arrears added to their outstanding mortgage during the fourth quarter as a way of helping them to get back on track.

Overall, lenders are currently receiving around 56 per cent of the repayments that are due from borrowers who are in arrears, well up on the 41 per cent they were receiving at the end of 2008.

Repossessions fell by 10 per cent during the three months to 8,246.

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