New Data From Ascent Performance Group

2014 Q3 data from Ascent Performance Group, the UK’s leading mortgage debt rehabilitation provider part of Irwin Mitchell, reveals the extent of debt owed by homeowners who have fallen into ‘serious’ arrears difficulty has risen to £7,021.

The statistics suggest that despite overall economic improvement with the number of people in mortgage arrears falling, there is a group of people for whom the position is hardening.

‘Serious’ arrears is defined as when borrowers have defaulted on monthly payments for approximately six consecutive months. At this point many lenders pass these customers onto debt rehabilitation specialists to help recover the money they are owed.

In Q3, according to Ascent, the average mortgage debt owed by each of these struggling homeowners was £7,021. Compared to Q2 this represented a slender 1.1% rise, but has jumped 20% since Q1 (£5,584). [1] 

Expert Opinion

A welcome development in recent years has been mortgage lenders giving customers more time to settle their arrears problems before passing them onto debt specialists, especially since the introduction of the Mortgage Market Review. However, if they can’t make contact with the customer then their debt will naturally increase before we are instructed.

"Therefore, it is our job to make contact with these customers and agree affordable, long-term repayment plans that divert the danger of possession." Mark Higgins - Chairman of WJM, Chairman of Ascent, and Partner of Irwin Mitchell

Based on the research, the top ‘serious’ mortgage arrears hotspots are Warrington, Walsall and Preston, where residents in this category owe an average of £14,073 each to lenders.

This shows that it is not just those living in expensive properties that fall into the worst arrears. Other factors such as social deprivation, lower income and higher unemployment levels also, understandably, have a big impact.

Of all customers who have fallen into serious arrears in Q3 over half have begun to positively resolve their situation. Of these, 33% have managed to set up a suitable repayment plan or cleared their debt in full, whilst 24% have paid off some of their debt to reduce arrears owed to the equivalent of less than 3 monthly payments. The remainder have been unable, at least as yet, to find a solution. [2]

[1] Based on official data from 4,465 borrowers in serious arrears from Q1 – Q3 2014

[2] Based on data from 1,466 borrowers in serious arrears in Q3 2014