Tuesday, May 21, 2024

Mortgage Arrears Growth Slows to Lowest Since Mini-Budget

The rate of mortgage arrears growth in the UK witnessed a notable deceleration in the first quarter of 2024, marking its slowest pace since the impact of the September 2022 Mini-Budget and the onset of the cost-of-living crisis. Pepper Advantage’s latest data reveals a 3.9% increase in arrears, hinting at a potential economic resilience amid fluctuating inflation and wage dynamics.

Pepper Advantage’s insights unveil a nuanced narrative surrounding mortgage arrears across the UK. While the overall growth rate in arrears has tapered, persisting at its highest since 2008, regional disparities persist. Notably, the North East and North West regions experienced an uptick in arrears growth, contrasting with the West Midlands and East Anglia’s minimal increments.

Furthermore, age demographics paint a revealing picture. Older homeowners, particularly those aged 60 and above, exhibit the highest absolute arrears rates, with the 51-60 age bracket following closely. However, the first quarter of 2024 indicates a general downward trend in arrears growth across all age groups, with the 31-40 cohort notably stabilizing, likely buoyed by inflation moderation and robust wage growth.

Amidst these shifts, the data also highlights a positive downturn in direct debit rejections, dropping by 2.3% compared to the previous quarter. This deviation from the customary post-holiday increase underscores a potential stabilization in household finances, offering a glimmer of hope for both lenders and borrowers.

Aaron Milburn, UK managing director for Pepper Advantage, underscores the complexity of the landscape, emphasizing the need for continued vigilance and support mechanisms. While signs of economic resilience emerge, regional and demographic variations underscore ongoing financial challenges. The trajectory into the second quarter remains uncertain, urging stakeholders to remain adaptable and responsive to evolving dynamics.

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