{"id":781,"date":"2024-01-22T21:26:04","date_gmt":"2024-01-22T21:26:04","guid":{"rendered":"https:\/\/abmoconsultancy.com\/?p=781"},"modified":"2024-01-26T11:31:54","modified_gmt":"2024-01-26T11:31:54","slug":"mortgage-lending-set-to-fall-in-2024-as-arrears-grow","status":"publish","type":"post","link":"https:\/\/abmoconsultancy.com\/index.php\/2024\/01\/22\/mortgage-lending-set-to-fall-in-2024-as-arrears-grow\/","title":{"rendered":"Mortgage lending set to fall in 2024 as arrears grow"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\tThe outlook for next year was one of continuing challenges in the mortgage market, the trade association said.<\/h2>\n\n\n\n

Mortgage lending is set to slump next year, as the number of arrears and repossessions increases, according to a trade association representing the UK banking and finance industry.<\/p>\n\n\n\n

The outlook for 2024 is one of continuing challenges in the mortgage market, but the main pressures on affordability look to be peaking now, UK\u00a0Finance\u00a0said.<\/p>\n\n\n\n

It added that, while it will take some time for the pressure on household finances to recede, it expects the situation to improve in 2025.<\/p>\n\n\n\n

Giving its predictions for next year,\u00a0UK Finance\u00a0said it expects lending for house purchases to fall to \u00a3120 billion next year, from \u00a3130 billion in 2023.<\/p>\n\n\n\n

External remortgaging activity is expected to fall to \u00a360 billion, from \u00a365 billion this year.<\/p>\n\n\n\n

The value of internal product transfers is also predicted to fall, from \u00a3219 billion this year to \u00a3202 billion in 2024.<\/p>\n\n\n\n

The report said: \u201cA\u00a0number of factors are minimising the extent of payment problems and ensuring that over 99% of the 10.8 million mortgages in the UK are not now in arrears.<\/p>\n\n\n\n

\u201cFirstly, the affordability tests for all new lending since 2014 ensure that customers can afford their mortgage payments, even at a higher (stressed) interest rate.<\/p>\n\n\n\n

\u201cSecondly, unemployment \u2013 historically the main cause of mortgage arrears \u2013 is at very low levels. And where customers are struggling with their mortgage payments, lenders have a range of tailored forbearance options which they can deploy on a case-by-case basis to best help borrowers\u2019 individual circumstances.<\/p>\n\n\n\n

\u201cThese mitigating factors mean that, whilst arrears are increasing, numbers will peak well below levels seen in previous cycles.\u201d<\/p>\n\n\n\n

Mortgage arrears are forecast to rise from 105,600 cases by the end of 2023 with arrears of over 2.5% of the outstanding balance, to 128,800 by the end of 2024.<\/p>\n\n\n\n

There were an estimated 4,400 repossessions through 2023, which UK Finance said is \u201can incredibly low number by historic comparisons\u201d.<\/p>\n\n\n\n

Next year, it expects to see a small increase to around 5,100, with this activity still relating to historic cases, most of which pre-date the coronavirus pandemic.<\/p>\n\n\n\n

The report said: \u201cWith a continuing favourable labour market, extensive lender forbearance and gradually improving affordability, the vast majority of customers now falling behind will eventually recover their positions. The very small minority of cases where this is not possible will not feed through into any material increase in possessions over our forecast period.\u201d<\/p>\n\n\n\n

James Tatch, head of analytics at UK Finance, said: \u201c2023 was a challenging year for both prospective and existing mortgage borrowers, facing affordability pressures from higher interest rates and the increased cost of living, as well as house prices still at elevated levels relative to income.<\/p>\n\n\n\n

\u201cIn the face of these challenges, borrowing for house purchase has been constrained. At the same time, most existing customers looking to refinance their loans chose to take a product transfer with their current lender, where affordability tests are not required.<\/p>\n\n\n\n

\u201cWith these pressures unlikely to ease significantly in the short-term, we expect lending to remain weak in 2024, with a gradual improvement in affordability reflected in a modest increase in activity levels in 2025.<\/p>\n\n\n\n

\u201cThe challenging environment has also pushed more households into mortgage arrears. However, the rigorous affordability tests in place since 2014 are now working to ensure that the vast majority of customers can still afford their mortgage payments even with the increased pressure on their finances.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

Housing News The outlook for next year was one of continuing challenges in the mortgage market, the trade association said. Mortgage lending is set to slump next year, as the number of arrears and repossessions increases, according to a trade association representing the UK banking and finance industry. The outlook for 2024 is one of […]<\/p>\n","protected":false},"author":1,"featured_media":782,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/posts\/781"}],"collection":[{"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/comments?post=781"}],"version-history":[{"count":13,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/posts\/781\/revisions"}],"predecessor-version":[{"id":1111,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/posts\/781\/revisions\/1111"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/media\/782"}],"wp:attachment":[{"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/media?parent=781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/categories?post=781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/abmoconsultancy.com\/index.php\/wp-json\/wp\/v2\/tags?post=781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}