The number of UK buy-to-let mortgages falling into arrears surged by almost 30% in the second quarter as a cocktail of higher interest rates and tougher regulation weighs on landlords.
(Bloomberg) — The number of UK buy-to-let mortgages falling into arrears surged by almost 30% in the second quarter as a cocktail of higher interest rates and tougher regulation weighs on landlords.
The UK had 8,980 buy-to-let mortgages in arrears by 2.5% or more of the outstanding balance at the end of June, according to data compiled by industry group UK Finance. That’s an increase from 7,030 at the end of March, suggesting the Bank of England’s aggressive rate hiking cycle is pushing some owners to the brink.
UK households are facing an avalanche of pressures triggered by high mortgage rates and the worst cost-of-living crisis in a generation. Meanwhile, tenants are bearing the brunt of the turmoil as landlords — whose interest-only mortgages are particularly exposed to rate hikes — either sell up or hike rents to deal with extra costs and stricter regulation.
Within the group of buy-to-let mortgages that slipped into arrears, almost 1,900 were in significant arrears of 10% of the total balance. Lenders took possession of 440 buy-to-let properties during the period, up from 410 in the previous quarter, according to the data.
While a greater number of homeowners slipped into arrears than landlords on an absolute basis — almost 82,000 — the number has increased by a smaller margin of 7% from the previous quarter. What’s more, the amount of homeowner mortgage repossessions dropped 19% from the first quarter to 610, which is close to historic lows.
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