United Kingdom
In mortgage arrears
Key points
- Around 16,000 mortgage holders were in serious arrears in 2007. Although slightly higher than three years earlier, this number is still lower than it was at the start of this decade and just just a tenth what it was in the early 1990s.
- By contrast, court orders for re-possession have trebled since 2003 and, at 51,000 in 2007, are now back to the levels of the early 1990s.
- Mortgage owners are a far more diverse group than they once were. 14% of heads of households with a mortgage are now not in full-time work and therefore arguably in an economically vulnerable position. This compares with 5% twenty five years ago.
Graph 1: Over time
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Graph 2: By population group
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Why this indicator was originally chosen
The 1980s saw a rapid contraction of social housing and expansion of home owners buying their home with the help of a mortgage. A large part of this was due to the government's 'Right to Buy' policy which allowed council tenants to buy their homes from the local authority. It also left a considerable local variation in the availability of council housing.
With owner occupation at a far higher level, large numbers of people became vulnerable to arrears, re-possession and negative equity during the downturn in the housing market in the early 1990s. Reduced job security meant that that those with a mortgage were more likely than before to find themselves unable to maintain the repayments on the money they had borrowed. Falling house prices in the 1990s, a result in part of lower inflation, meant that the home might have to be sold for less than it was bought, leaving the erstwhile owner with a continuing, insupportable debt.
Although much less of an issue than in the early 1990s, mortgage debts continue to represent a problem for many people, with powerful detrimental effects on standards of living and on stress. This indicator therefore tracks the number of households over 12 months in arrears with their mortgage.
Definitions and data sources
The first graph shows both the number of residential mortgage holders who were a year or more in arrears with their mortgage repayments at the end of each of the years shown and the number of court orders made for mortgage repossession during each year. Note the number of orders excludes suspended orders, as these do not directly relate to repossessions.
The data source for mortgage arrears is the Council of Mortgage Lenders (CML) and relates to the United Kingdom. The figures are based on a sample which typically averages 85% of the total mortgage market in any given year. The data source for court orders is the UK Housing Review table 53, which in turn obtained its data from Ministry of Justice, and the data relates to England and Wales.
The second graph shows the proportion of households with mortgages where the head of the household has the economic status shown. The total is effectively the proportion of households with mortgages where the head of the household is not in full-time work. The data is from the Survey of English Housing and relates to England only.
Overall adequacy of the indicator: high. The data for both arrears and court orders is produced regularly and is considered to be reliable.
External links
- For a wide-ranging discussion of all aspects of housing, including its links with poverty, see the New Policy Institute 2006 report for the Joseph Rowntree Foundation entitled Housing and neighbourhoods monitor.
- See the Joseph Rowntree Foundation report entitled Home ownership and poverty in Britain.
Relevant 2007 Public Service Agreements
None directly relevant.
The numbers
Graph 1
| Year | Mortgages more than 12 months in arrears | Court orders for repossession |
|---|---|---|
| 1987 | 15,000 | 25,800 |
| 1988 | 10,300 | 25,300 |
| 1989 | 13,800 | 28,100 |
| 1990 | 36,100 | 54,700 |
| 1991 | 91,700 | 73,900 |
| 1992 | 147,000 | 43,000 |
| 1993 | 151,800 | 32,000 |
| 1994 | 117,100 | 30,500 |
| 1995 | 85,200 | 27,800 |
| 1996 | 67,000 | 22,500 |
| 1997 | 45,200 | 22,500 |
| 1998 | 34,900 | 25,300 |
| 1999 | 29,500 | 23,600 |
| 2000 | 20,800 | 20,400 |
| 2001 | 18,200 | 17,800 |
| 2002 | 16,500 | 16,200 |
| 2003 | 12,700 | 16,700 |
| 2004 | 11,000 | 20,300 |
| 2005 | 15,000 | 33,100 |
| 2006 | 16,100 | 46,000 |
| 2007 | 15,600 | 51,000 |
Graph 2
| Year | Part-time employment | Unemployed | Economically inactive | Total |
|---|---|---|---|---|
| 1981 | 1% | 3% | 1% | 5% |
| 1993/94 | 4% | 6% | 8% | 18% |
| 1996/97 | 4% | 2% | 5% | 11% |
| 1997/98 | 4% | 2% | 9% | 15% |
| 1998/99 | 5% | 1% | 9% | 15% |
| 1999/00 | 4% | 1% | 9% | 15% |
| 2000/01 | 4% | 1% | 9% | 14% |
| 2001/02 | 6% | 1% | 8% | 14% |
| 2002/03 | 6% | 1% | 7% | 13% |
| 2003/04 | 6% | 1% | 6% | 13% |
| 2004/05 | 6% | 1% | 6% | 13% |
| 2005/06 | 6% | 1% | 6% | 14% |
| 2006/07 | 7% | 1% | 6% | 14% |