The number of landlords falling into arrears on their mortgage payments has doubled in the last year, according to figures from UK Finance.

1. Landlords are Facing Trouble: The number of landlords who have had their properties taken away because they couldn’t keep up with their mortgage payments has increased. In just three months, 440 buy-to-let landlords had their properties taken, which is a 7% increase from the start of the year.
2. Late Payments on the Rise: There’s been a significant rise in the number of landlords struggling to make their mortgage payments on time. Compared to last year, there’s been a 59% increase, meaning nearly 9,000 landlords have fallen behind on their payments recently.
3. The Extent of Arrears: The amount by which these landlords are behind varies:
   • Roughly 4,810 landlords are behind by 2.5% to 5% of their total owed amount, showing a 126% increase compared to last year.
   • About 2,300 are behind by 5% to 10% – a third more than last year.
   • Almost 2,000 landlords are lagging by more than 10%, which is a small 4% rise from the previous year.
4. Homeowners in Similar Boat: It’s not just landlords; many homeowners are also struggling. Around 82,000 homeowners owe 2.5% or more of their outstanding balance, with 28,690 of them being more than 10% behind.
5. Why is This Happening?: Experts suggest the main reason for this difficulty is the increase in mortgage interest rates. For the past decade, interest rates have been relatively low, but they’ve been rapidly increasing over the last 18 months, making it difficult for households to cope.
6. House Prices are Decreasing: Alongside this, house prices have been falling. In July, the number of properties reducing their asking price was the highest since the 2009 financial crisis. The average property price has fallen by 2.4% in the past year.
7. Landlords’ Reaction: Many landlords are saying that the combination of increased interest rates and changes in taxes is making it hard for them. As a result, they’re either increasing rents or leaving the market entirely.
8. Mortgage Costs Remain High: Even though some lenders have slightly reduced their rates, the average two-year mortgage rate is about 6.84%, and the five-year rate is around 6.35%.
9. What’s the Future Looking Like?: The Bank of England has hinted that interest rates might stay above 5% until 2026, which could continue to strain mortgage holders.
10. A Ray of Perspective: While the numbers might sound alarming, it’s crucial to understand the bigger picture. Less than 1% of homeowners and below 0.5% of landlords in the UK are actually behind on their payments.

Summary

A combination of rising interest rates and other economic factors is making it harder for landlords and homeowners to pay their mortgages on time. While the percentage of those affected is relatively small, the rapid changes in the property and finance markets are causing understandable concern for many.