Possession statistics for Q1 of 2024 have recently been released. This write-up provides an analysis of some of the trends that have emerged from the data.

Repossessions

Repossessions of homeowner mortgaged properties have increased by more than a third in the first three months of 2024, with almost 900 properties being repossessed. This is over 35% higher than the last quarter of 2023 and represents a 9% year on year growth. However, the overall number of home repossessions remains low compared with historic norms and the increase is largely attributed to older arrears cases working their way through the system as courts continue to deal with Covid-19 related backlogs.

A similar increase can also be seen in the buy to let market for the first three months of 2024 with 20% more properties being repossessed compared with the previous quarter. However, interestingly this is 40% higher than the same period in 2023 highlighting the increasing pressure that landlords are feeling as a result of the cost of living crisis and the Bank of England’s decisions to keep interest rates at current levels in order to continue to address inflationary pressures in the wider economy.

Arrears

The position with regards to arrears is also interesting with there being a small increase, approximately 3%, in homeowner mortgages in arrears of 2.5% in the first quarter of 2024. However, growth was higher, 6%, amongst those homeowner mortgages in arrears of over 10% or more again highlighting the compounding impact of the prolonged cost of living crisis in terms of pushing those already struggling to meet mortgage commitments further into arrears. Arrears levels were broadly flat among buy-to let mortgages.

Conclusion

Whilst repossession rates remain low compared to historic norms they are nevertheless rising significantly as courts continue to work their way through Covid-19 related backlogs. Alongside this, arrears levels are slowly starting to increase as the impact of rapid interest rate rises and wider economic headwinds impact household budgets, in particular the budgets of households that were already under pressure before the current cost of living crisis. These signs all point towards there continuing to be significant arrears and repossession related activity in the County Court system.