Trends in mortgage borrowers’ repayment difficulties

Publication type

Journal Article


Publication date

June 1, 2005



This article has sought to identify trends in mortgage repayment difficulties and arrears since 1992 using the British Household Panel Survey (BHPS).

The BHPS reports that the proportion of mortgage borrowers facing repayment difficulties and arrears has fallen by over three quarters since 1992 to stand respectively at 4% and 1% in 2004.

These results differ from CML arrears data due to differences in definitions, and a potential reluctance by borrowers, surveyed in the BHPS, to acknowledge arrears.

The incidence of repayment difficulty and arrears increased with the number of children and among lone parents with children.

Households with savings were much less likely to suffer from mortgage repayment problems, whereas MPPI only has a marginal effect.

Married households tend to have the lowest incidence of repayment difficulties, whereas divorce and separation tend to increase mortgage repayment problems.

Social class also appears to have a profound effect, with professional and managerial classes having the lowest rates of both repayment difficulty and arrears.

We also found marked regional differences. BHPS data suggests that Scotland in particular has lower rates of arrears payment difficulties over the period considered.

These results will feed into future statistical analysis of the BHPS to explore which factors are most important in explaining payment difficulties, to produce predictions of borrowers' default risk and establish which strategies are most successful to forestall further arrears.

Published in

Housing Finance







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