The Covid-19 pandemic and worsening economy have been blamed for a small annual rise in the number of buy-to-let mortgages in arrears.
Data from trade body UK Finance showed there were 5,000 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2020, up six per cent from the second quarter last year.
There were 1,270 buy-to-let mortgages with more significant arrears, those that represent 10 per cent or more of the outstanding balance, from April to June. This was five per cent greater than the same months in 2019.
UK Finance attributed the rise in buy-to-let arrears to the early effects of Covid-19 but added that it is a relatively small increase and from a low base.
Filip Karadaghi, managing director of buy-to-let peer-to-peer lender LandlordInvest, blamed the worsening economy for the increase but said his platform has operated without any arrears during the pandemic.
“It is likely that the buy-to-let arrears have increased due to the worsening economy and rent arrears,” he said.
“All of our buy-to-let borrowers have continued to service their loans as usual.”
Meanwhile, the number of homeowner mortgages in arrears fell from the previous year.
There were 73,580 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2020, down three per cent year-on-year.
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Additionally, 130 buy-to-let mortgage properties were taken into possession during April, May and June, 80 per cent fewer than the second quarter last year and 90 homeowner mortgaged properties were repossessed in the second quarter, 93 per cent fewer annually.
UK Finance said that following the industry moratorium on involuntary possessions, the low possessions numbers reflect cases where the property was vacant or where the customer requested the possession to go ahead.