The Analysis News & Opinions
Opinion
Mortgage arrears fell in the third quarter
The number of mortgages in arrears of 2.5% or more of the outstanding balance fell again in the third quarter of 2017, but cases of possession edged upwards from an historically low level. At 88,300, the number of loans in arrears
was 2% lower than in the second quarter of the year (90,400) and at its lowest level since this run of data began in 1994. The number of properties taken into
possession in the third quarter nudged upwards to 1,900, the same total as in the first three months of this year. The second quarter total of 1,800 cases of possession had been the lowest since quarterly data began in 2008, and the proportion of properties taken into possession (at 0.02%) has remained unchanged in each period since the second quarter of 2015. Within the total, the number of owner-occupied properties taken into possession increased in the third quarter from 1,100 to 1,300, while buy-to-let repossessions fell from 700 to 600. The last time the number of owner-occupied possession rose was in the first quarter of 2014, when it increased from 4,900 to 5,000. The number of mortgages in arrears fell
across all bands, apart from those owing 10% or more of the outstanding balance. The number of mortgages in this category edged up by 0.4% from 25,500 to 25,600, partially reversing a 4% fall in the number of loans in this category in the second quarter of the year. A total of 83,300 owner-occupiers were in
arrears of 2.5% or more of the balance, down 2% from 85,300 in the second quarter. Reflecting the pattern across the wider market, owner-occupier arrears declined in all bands apart from those owing 10% or more of the balance, with the total in this category edging up from 24,400 in the preceding quarter to 24,500.
June Deasy Head of mortgages policy, UK Finance
Be prepared for new card payment ban
Creditors, collections agencies, and debt purchasers have been urged to start preparing for the government’s decision to ban additional charges for certain future card payments. From 13 January 2018, businesses will no
longer be able to charge surcharges for certain card transactions, but will still face the costs for processing card payments. John Ricketts, president of the Credit Services Association,
said that this
could have “serious implications” for debt collection agencies managing card payments for outstanding debts, and they needed to be prepared: “Members need to act now to ensure their websites and letter suites are updated or they will be breaking the law. “Although a simple enough initiative on
the outside, it may involve significant changes to IT processes and call processes, all of which will need to be in place before the January deadline.” Mr Ricketts was also concerned that the
plans would add yet another layer of cost, which would, ultimately, have to be met elsewhere. “While Her Majesty’s Treasury has stated
it will engage with businesses regarding whether more can be done to help them with these charges, and the government has previously capped the costs businesses face for processing card payments, further costs appear unavoidable,” he said. “While the transaction charges may
appear small to the outside world, they can represent a large percentage of the total commission for the work undertaken, especially when only nominal payments have been agreed. “Multiply these charges by the many
thousands of accounts an agency may handle, however, and it can add up to a significant sum of money.” As part of the government’s new Payment
Services Regulations 2017 (PSR 2017), alternatives to card payments are being more actively promoted. Where the customer gives their explicit consent, authorised third parties, including
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John Ricketts
financial-technology firms, will be able to access data from all of the customer’s bank accounts in order to provide information services and make payments on behalf of customers. This move is part of the Open Banking
initiative prompted by the Competition and Markets Authority’s investigation into the retail-banking market. Open Banking aims to enable personal
customers and small businesses to share their data securely with other banks and with third parties, allowing them to compare products on the basis of their own requirements and to manage their accounts without having to use their bank. “The intention is that a range of
alternative payment options may be available to consumers,” Mr Ricketts added. “This may enable innovations such as managing all bank accounts from one app or making automatic payments between bank accounts when funds are running low to avoid overdrafts.” In the longer term, he believed this would
be of benefit to creditors and customers alike, but in the short term, prohibiting the charging of fees would make a difficult job more difficult still. “For agencies who are used to passing on these costs, this will no longer be an option,” he said.
December 2017
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