Data from lenders trade body UK Finance show an 18 per cent leap in buy to let arrears in the past quarter compared to the three months previously.

BTL mortgage arrears of 2.5 per cent or more of the outstanding balance increased to 13,570. Some 500 buy to let mortgaged properties were taken into possession in Q4, which is 11 per cent greater than the previous quarter.

The percentage rise in home ownership mortgage arrears was a more modest 7.0 per cent.

UK Finance also warns that there are 230,000 BTL mortgage holders whose fixed rate deals are due to end this year.

The body insists that lender stress tests have helped ensure that borrowers are able to keep up with their mortgage payments, even when their interest rate rises above those in place when they first took out their loans. However it adds: “We know that other factors outside the control of lenders can also impact customers’ ability to manage their mortgage payments, so we would encourage anyone worried about their finances to reach out to their mortgage lender at the earliest opportunity to discuss the options available for their circumstances.”

It says the total number of possessions remains very low by long term standards. 

The body says: “Possession is only ever a last resort and after other options have been explored. Across BTL and homeowner mortgaged properties, a total of 1,040 were repossessed in Q4 2023. This compares with nearly 2,000 in Q4 2019 before the pandemic.”

Eric Leenders of UK Finance adds: “The number of mortgage holders in arrears, whilst still low, is continuing to rise as the cost of living and high interest rates take their toll on households. Importantly, help is available to anyone worried about their finances – please reach out to your lender as soon as possible to discuss the support options available. Lenders have teams of trained experts ready to help. Contacting your lender to find out what support is available won’t affect your credit score.”