Buy To Let Mortgage Arrears Lower Than Residential Arrears

Thursday, May 22, 2014
Buy To Let Mortgage Arrears Lower Than Residential Arrears

Buy To Let Mortgage Arrears Lower Than Residential Arrears

CML Data Shows Landlords
Have Less Buy To Let Mortgage Arrears Than Home Owners

New data released by the UK Council of Mortgage Lenders (CML) shows that UK landlord’s with buy to let mortgages have less outstanding mortgage arrears than residential property owners.

Buy-to-let mortgage holders have far less mortgage arrears than residential property owners.

Just 0.9% of UK private rental sector (PRS) landlords have mortgage arrears of more than three months, compared to 1.7% of residential property owners, according to data from the Council of Mortgage Lenders.

Overall, 138,200 UK mortgages had arrears of 2.5% of the outstanding balance, the lowest recorded level since 2008. Property repossessions increased to 6,400 up from the 6100 observed in the last quarter of 2013, but figures are 20% down from the first quarter of last year.

In the first quarter of 2014 only 128 properties were repossessed, a decent fall from the 226 properties repossessed in the first quarter of 2013 and this in part due to landlords utilising the wide range of specialist products and services available to them.

According to data published by the Finance & Leasing Association (FLA), there was a 43% drop in second charge mortgage repossessions compared with the same period last year. The CML described this as the usual seasonal pattern for the first quarter of the year.

Chief Economist at the FLA, Geraldine Kilkelly, said: “The rate of repossessions in this market remains low at 0.049%, reinforcing lenders’ commitment to helping customers in financial difficulty and to taking repossession action only as a last resort. The overall forecast for 2014 suggests that property repossessions will be at a similar level to 2013.”

Rather than risk financial difficulties, landlords are being advised to seek rent protection for tenants so that rental income can be guaranteed should the tenant experience a sudden change in financial circumstances, such as losing their job, allowing the landlord to continue making buy to let mortgage payments rather than impacting on the landlords personal finances and avoiding accruing mortgage arrears.

This was written by Mike Clarke. Posted on at 11:35 am. Filed under Buy To Let, Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.