Latest news with #AaronMilburn
Yahoo
6 days ago
- Business
- Yahoo
Mortgage recovery hinges on a Bank of England interest rate cut
Homeowners across the UK are catching a break as mortgage arrears fell for the first time since the cost-of-living crisis began – but a full recovery will hinge on the Bank of England's decision on Thursday. Missed mortgage payments in the second quarter fell by 4.4 per cent across the UK, whilst direct debit rejections were down 5.1 per cent. This marked the firm quarter since the pandemic where both areas have declined. London had the smallest dip in arrears at just 0.9 per cent – making it the only region having a fall less than one per cent. The North West led the pack with a 7.9 per cent reduction, whilst Wales was second at 7.7 per cent. Fresh loans tumbled 3.2 per cent, as the report pointed to the Stamp Duty deadline on 31 March – where new originations peaked. Chancellor Rachel Reeves changed zero rate thresholds for main residences, which dropped from £250k to £125k with first-time homebuyer thresholds dropping from £425k to £300k leading to a spike in loans as Brits rushed to avoid the lower tax rate. The figures, revealed in a fresh report by credit manager Pepper Advantage, come ahead of a crucial interest rate cut decision from the Bank of England on Thursday. Interest rate cut amid 'fragile' recovery Economists anticipate the Bank's Monetary Policy Committee (MPC) will cut rates by 25 basis points in what is expected to be a split decision. The National Institute of Economic and Social Research (NIESR) projected one more cut, following an August reduction, in 2025. The group also predicted a rate cut in early 2026, ahead of projections previously pencilled in. Aaron Milburn, UK managing director at Pepper Advantage, said the drop in mortgage arrears was a 'promising sign that some household financial pressures may be easing after years of inflation and rising living costs'. But he warned: 'It is important to remember that any recovery remains fragile'. Pepper Advantage's report said the drop in arrears reflected a benefit in household budgets from less inflationary pressures and lower interest rates. The MPC have slashed rates four times in the last year after they reached a post-financial crisis high of 5.25 per cent in August 2023 and were held at the level for near 12 months. Harriet Guevara, chief savings officer at Nottingham Building Society, said any further reductions in the base rate would signal a 'gradual easing in the cost of borrowing'. 'While we're unlikely to see an immediate change in mortgage pricing, those coming to the end of fixed deals later this year may find better options opening up,' she added. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
7 days ago
- Business
- Business Wire
UK Mortgage Arrears Fall for First Time Since Cost of Living Crisis
LONDON--(BUSINESS WIRE)-- Pepper Advantage, a global credit management and technology company, today released the latest data on its portfolio of over 100,000 UK residential mortgages. Q2 2025 marks the first quarter since the COVID-19 pandemic in which both arrears and direct debit rejections (DRRs) have declined, with the overall arrears rate decreasing by 4.4% and the DRR rate falling by 5.1%. The reduction in UK arrears, including both residential and buy-to-let mortgages, was driven by a significant 4.7% decline in the residential mortgage arrears rate, which has tracked declines in Consumer Price Inflation, including housing costs, since 2024. Eased living costs and earlier interest rate reductions together supported Pepper Advantage's residential mortgage portfolio in Q2. Notably, arrears rates fell across every UK region for the first time since Q2 2021, indicating a UK-wide easing of financial pressure after years of inflation and rising living costs. Key findings: The buy-to-let arrears rate rose by 0.9% following a modest decline in Q1. However, this marks a sharp slowdown compared to H1 2024, when the arrears rate grew by more than 10% in each of the first two quarters. Year-on-year, BTL arrears remain 9.5% higher, underscoring the challenges landlords face as the market changes. Regional trends: Arrears rates declined in 11 UK regions in Q2 2025 – the first time this has occurred since Q2 2021. The largest improvements were seen in the North West (-7.9%), Wales (-7.7%), and East Midlands (-7.0%), while London (-0.9%) and the South East (-3.1%) posted the smallest declines. Direct Debit Rejections fell by 5.1%, the largest drop since Q1 2021. New Originations decreased by 3.2%, reflecting the impact of the March expiration of the stamp duty holiday. New originations peaked in March, then dropped significantly in April before recovering in May and June. Aaron Milburn, Managing Director, UK, Pepper Advantage, said: 'The significant drop in residential mortgage arrears, alongside the simultaneous decline across all UK regions, is a promising sign that some household financial pressures may be easing after years of inflation and rising living costs. This marks the most positive quarterly movement we have observed since this report began. 'It is important to remember that any recovery remains fragile. Unexpected economic shocks or hits to household budgets could quickly reverse this improvement. We remain watchful as we enter the second half of the year and are ready to support borrowers in whatever ways they need.' Pepper Advantage's UK Credit Intelligence report is published quarterly – the full Q2 2025 report is available here and the full Q1 2025 report here. *Mortgages in arrears are defined as those that are 30+ days delinquent in payment. **A direct debit rejection is a form of missed mortgage payment that typically occurs due to insufficient funds when a direct debit is called and is an early indicator of borrower stress. **Pepper Advantage manages organic origination for 10 UK originators, 80% of which are capital markets funded. About Pepper Advantage Pepper Advantage is a global credit intelligence company that offers a range of data led and credit management services via a technology platform that spans across Asia, Europe, and the United Kingdom. The company, with $55 billion (USD) assets under management, operates in multiple asset classes including residential and commercial mortgages, real estate, SME loans, asset financing and leasing, auto and consumer loans, credit cards, retail finance and BNPL, in addition to offering outsourced operational support services to both financial and non-financial clients. It helps investors, financial institutions, fintechs, and banks manage their credit portfolios, reducing the cost and complexities of systems and supporting new non-bank lending, with a particular focus on clients whose customers are underserved by traditional mainstream lenders.
