The Intermediary – February 2026 - Flipbook - Page 52
RESIDENTIAL
Opinion
Lenders need to
keep up the good
work on arrears
T
hroughout 2025,
the mortgage
market continued
to demonstrate real
resilience. Arrears
continued to trend
downwards throughout the year
across both residential and buy-to-let
(BTL) sectors – adding further merit
to the view that many borrowers may
have finally been able to stabilise their
finances aer extended pressure.
While possessions did increase
– most likely suggesting greater
difficulty in the higher arrears bands
– they still represent a very small
proportion of cases and further proves
that it is still a last resort for lenders.
On the ground, we see the proactive
work of lenders firsthand, engaging
early with borrowers to provide
tailored support and if necessary,
flexible exit strategies to ensure good
outcomes are still achieved. The
positive results of the past 12 months
show that not only are conditions
improving, but the strategies of
lenders and their third-party suppliers
are clearly working.
Recent economic data has given
further cause for optimism, most
notably improving inflation and
further cuts to the Bank of England
base rate throughout 2025. We did see
inflation creep back up in December’s
data, but the hope is that this is more
of a seasonal or temporary blip.
While this may make further
base rate cuts more unlikely, there
is still growing expectation among
economists that there will be two
more cuts in 2026 – which will
certainly help the overall arrears
picture. The signs are promising for
new borrowers, particularly as lenders
continue to support improvements
in innovation and affordability with
changes to products and criteria.
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The Intermediary | February 2026
This is being evidenced already,
as Moneyfacts reports that product
choice has continued to rise to its
highest point since 2007. Higher loanto-value (LTV) options – which are
particularly needed among first-time
buyers (FTBs) – are at their highest
level for nearly 19 years. There’s
plenty for mortgage brokers to be
shouting about and plenty of reasons
for potential borrowers to be positive.
Remaining vigilant
At the same time though, it’s certainly
reason for caution. It’s important
to stress that we are not out of the
woods just yet. Product choice at such
a high level is likely to make those in
the industry with longer memories
slightly nervous. This is particularly
true in the geopolitical and economic
climate we currently find ourselves
in, with a fragile economy,
unemployment at a four-year high
and wage growth slowing.
Despite its recent blip, the
belief is that inflation will return
to the hallowed 2% target. That
does of course depend on so many
factors – whether it’s government
policy at home or any further
escalations abroad.
There’s no question that lessons
have been learned over the last
decade, and lenders are in much beer
shape to loosen rules and relax their
approach to risk. To put more keys
in the hands of buyers and enable the
housing market to play its significant
role in driving economic growth, we
need to innovate as an industry.
At the same time, we have to remain
vigilant and keep a laser focus on
arrears. We have to be conscious of
the factors in play around us to make
sure we support both new and existing
borrowers and make sure we catch any
challenges early.
DAVID MILLER
is divisional director at
Spicerhaart Corporate Sales
My message to mortgage lenders
is that we need to keep up the good
work on forbearance and continue
to implement strategies to support
borrowers in difficulty.
A prime example is Assisted
Voluntary Sale (AVS), which provides
a viable exit strategy for all parties.
Lenders work with an asset manager
to market the property and achieve
the best possible price in the shortest
amount of time. Not only does this
avoid the stress of repossession, but
it is also possible for the borrower to
maximise equity from the sale. We’re
increasingly seeing lenders adopt this
strategy and partner with expert asset
managers to look aer this process
from start to finish.
It does rely on lenders staying
close to their mortgage book. With
an accurate view of both the value
and potential risk of their property
portfolio, lenders are able to make
informed decisions much earlier.
Asset managers play a critical role too,
with regular reviews of the mortgage
book to identify any red flags. The
ultimate strategy is to enhance the
intelligence you may already have
from automated valuation models
(AVMs) with boots on the ground to
fully determine the property’s current
state and potential value.
Keeping up the good work on
arrears and ensuring repossession
remains that last resort requires
lenders to stay fully focused. Above
all, they need to leverage the right
intelligence and industry partners to
understand the full picture around
their property portfolio, and to be able
to provide early intervention where
it’s needed most. ●
