‘Stark warning’ as landlord repossessions up 11% year-on-year

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, comments on the repossession statistics from UK Finance, out today.

Buy-to-let mortgages

“Buy-to-let mortgage repossessions are up by 11% year-on-year, which is a stark warning to landlords. Over the years landlords have been facing hits from all sides, so it is worrying to see a growing number of borrowers can no longer keep up with mortgage repayments and are having properties repossessed.

“Those landlords with a portfolio may have to sell up in the coming months if they are finding their margins squeezed. Investors typically expect to make better profits if investing in multiple properties, but by the same notion, it can open them to more risk if property prices plummet and they are locked into a mortgage or have no tenant for an extended period of time.”

Residential homeowner mortgages

“There will be many borrowers coming off cheap fixed rate deals that revert onto a much higher variable rate, but not everyone might be able to afford to remortgage. Borrowers will fall into arrears if they cannot keep up with their mortgage repayments, and eventually, could lose their home.

“The incentive to refinance is critical, as there is a difference of more than 2% to escape a revert rate, compared to just 1% back in August 2023, based on the average two-year fixed rate versus the Moneyfacts average Standard Variable Rate (SVR).

“UK Finance figures show that homeowner mortgage repossessions are up 47% year-on-year, which is concerning, and according to the Bank of England, the rate charged on outstanding mortgages rose to 3.88% in June, up from 2.93% in June 2024 and 2.17% in June 2020.”