- North East of England has the UK’s highest share of homeowners in arrears
Homeowners in parts of Northern England are more than twice as likely to be behind on their mortgage repayments as those in the south, new research has revealed.
With interest rates rising sharply from record lows in recent years, mortgage arrears have been steadily climbing, according to analysis of Financial Conduct Authority data by longer-term lender April Mortgages.
There are more than 115,000 UK borrowers who are at least two months behind with their monthly payments, according to the FCA figures.
North-south divide: New analysis of FCA data by April Mortgages reveals a clear north-south divide with lowest levels of arrears in the South West
It showed the North East has the highest share of borrowers who have missed at least their last two mortgage repayments.
As many as 1.76 per cent of all mortgage borrowers in the region are in arrears. This is followed by the North West, where 1.6 per cent of borrowers are in arrears.
Mortgage arrears are when people fall behind on their mortgage repayments.
Total arrears rose to £21.9billion, according to Bank of England figures released last month, which is 32 per cent higher than it was a year ago and the highest recorded since 2014.
In southern parts of England, mortgage arrears are much lower, based on FCA figures.
This is despite the average property price being higher, which in turn often makes for bigger mortgages.
For example, the average new mortgage amount for a property in Northern England is currently just shy of £160,000, according to UK Finance.
In the South West the average new mortgage is just shy of £230,000 and in London it’s £400,000.
Falling behind: More than 115,000 mortgages at least two months in arrears, according to analysis of FCA data by longer-term lender April Mortgages
‘The number of UK homeowners falling into arrears is on the rise and these latest figures show clear evidence of a north-south divide,’ said Rachel Hunnisett, director of mortgage distribution at April Mortgages.
‘Homeowners in parts of northern England and Wales seem to have been disproportionately affected by the combination of rising living costs and higher mortgage rates.’
‘Although inflation has fallen this year, the cost of living is still increasing and households without spare disposable income or significant savings to fall back on are finding it harder to maintain their mortgage repayments.’
While the lowest mortgage rates are currently just below 4 per cent, mortgage rates spiked last year meaning some unlucky borrowers will be in rates higher than 6 per cent at present.
Even now, many people either buying or remortgaging will find themselves securing rates of around 5 per cent or higher – particularly those with lower credit scores.
In fact, the average five-year fixed mortgage rate across the whole market is currently 5.09 per cent, according to Moneyfacts and the average two-year fix is 5.41 per cent.
This means that the typical borrower fixing for five years on a 25 year repayment term may face monthly payments of £1,180 a month.
Rachel Hunnisett, of April Mortgages, adds: ‘Interest rates may have passed their peak, but many homeowners are paying more for their mortgage than they were in recent years and this is causing borrowers greater stress.
‘If you’re concerned about rising interest rates, opting for a longer-term fixed-rate mortgage can offer peace of mind and financial stability.
Locking in for longer means your monthly payments will remain predictable, regardless of how the market fluctuates.
‘If anyone is finding it difficult to keep up with their repayments, speak to your lender as early as possible about the options open to you to reduce the risk of falling into arrears.’