Pepper Advantage, a global credit intelligence company, today published data on its portfolio of over 100,000 UK residential mortgages that shows the overall rate of mortgage arrears* growth has dropp...
LONDON: Pepper Advantage, a global credit intelligence company, today published data on its portfolio of over 100,000 UK residential mortgages that shows the overall rate of mortgage arrears* growth has dropped to only 1.1% in Q2 2024. This marks the third consecutive quarterly decrease in the arrears growth rate across the company’s UK portfolio, which fell from 5.7% in Q4 2023 to 3.9% in Q1 2024.
Key points from the report include:
While the overall UK arrears environment showed signs of improvement, growth trends were distinct between Northern and Southern regions.
Arrears trends were reflected in Direct Debit Rejections (DDRs), a form of missed mortgage payment that typically occurs due to insufficient funds when a direct debit is called, an early indicator of borrower stress:
Aaron Milburn, UK Managing Director for Pepper Advantage, said: “So far this year, every quarter has shown gentle improvement in the mortgage market. Arrears rates for residential mortgages may have plateaued and new originations are climbing, despite persistently high interest rates. Data from the past three quarters suggests certain segments of the market are recovering while others lag behind.
“The buy-to-let market often attracts criticism but is a crucial part of the housing market that requires stable supply and demand. The uptick in BTL arrears reflects growing structural issues within the rental market as landlords struggle to keep up with higher costs – presenting potential risks not only to landlords’ finances but also rented housing supply more broadly.
“Overall, our latest data is cause for cautious optimism as the market appears to be turning a corner, but key segments such as BTL require attention given remaining pressures.”
Pepper Advantage’s UK Credit Intelligence report is published quarterly. The Q1 2024 report (available here) showed slowing growth in arrears in the first three months of the year.
* Mortgages in arrears are defined as those that are 30+ days delinquent in payment.
About Pepper Advantage
Pepper Advantage is a global credit intelligence company that offers a range of data led and credit management services via a technology platform that spans across Asia, Europe, and the United Kingdom. The company, with $55 billion (USD) assets under management, operates in multiple asset classes including residential and commercial mortgages, real estate, SME loans, asset financing and leasing, auto and consumer loans, credit cards, retail finance and BNPL, in addition to offering outsourced operational support services to both financial and non-financial clients. It helps investors, financial institutions, fintechs, and banks manage their credit portfolios, reducing the cost and complexities of systems and supporting new non-bank lending, with a particular focus on clients whose customers are underserved by traditional mainstream lenders.
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Fonte: Business Wire
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