The Government closely monitors levels of mortgage arrears, which remain low by historical standards. UK Finance has predicted mortgage arrears will fall in 2025.

There are significant measures in place to protect vulnerable mortgage borrowers. Financial Conduct Authority (FCA) rules require lenders to engage individually with their customers who are struggling or who are worried about their payments, and the Mortgage Charter also remains in place providing additional flexibilities to help customers manage their mortgage payments over a short period.

The pricing and availability of mortgages is a commercial decision for lenders in which the Government does not intervene. However, we recognise this is a concerning time for mortgage borrowers.

The path to lower interest rates is through low inflation. The independent Monetary Policy Committee continues to have the Government’s full support as it takes action to return inflation to target. The Government’s Mortgage Charter - in addition to the significant safeguards already in place - is providing support to vulnerable households; and mortgage arrears and repossessions remain low.

The pricing and availability of mortgages is a commercial decision for lenders in which the Government does not intervene. However, we recognise this is a concerning time for mortgage borrowers.

The path to lower interest rates is through low inflation. The independent Monetary Policy Committee continues to have the Government’s full support as it takes action to return inflation to target. The Government’s Mortgage Charter - in addition to the significant safeguards already in place - is providing support to vulnerable households; and mortgage arrears and repossessions remain low.

Over the last two years, the Government has demonstrated its commitment to supporting the most vulnerable by providing one of the largest support packages in Europe. Taken together, support to households to help with the high cost of living is worth £104 billion over 2022-25 - or £3,700 per UK household on average.

We recognise this will be a concerning time for homeowners and mortgage holders. Anyone worried about making their mortgage repayments should speak to their lender as soon as possible.

Mortgage arrears and repossessions remain below pre-pandemic levels, which were themselves extremely low. The FCA reported 0.86% of total residential mortgage balances in arrears in the first quarter of 2023 which is significantly lower than the 3.32% rate in 2009. However, where mortgage borrowers do fall in financial difficulty, Financial Conduct Authority guidance requires firms to offer tailored support. This could include a range of measures depending on individual circumstances.

The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit, and protection in the courts through the Pre Action Protocol, which makes it clear that repossession must always be the last resort for lenders.

We recognise this will be a concerning time for homeowners and mortgage holders. Anyone worried about making their mortgage repayments should speak to their lender as soon as possible.

Mortgage arrears and repossessions remain below pre-pandemic levels and three times lower than the levels we inherited in 2010. However, where mortgage borrowers do fall in financial difficulty, Financial Conduct Authority guidance requires firms to offer tailored support. This could include a range of measures depending on individual circumstances.

The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit, and protection in the courts through the Pre Action Protocol, which makes it clear that repossession must always be the last resort for lenders.

The Government remains watchful for any emerging trends in light of rising interest rates; however, these will be based on arrears levels that are at historic lows: out of a total of 8.4 million residential mortgages, according to the latest UK Finance data, 74,560 were in arrears at the end of June, 10% fewer than in the same period in the previous year.

Interest rates are rising across the world as countries manage rising prices largely driven by the COVID-19 pandemic and Putin’s illegal invasion of Ukraine. As everyone’s financial situation is unique, the impact of these rate rises on individual households will vary. It is worth noting, however, that around 75% of residential mortgages are on a fixed rate and are therefore shielded from rate rises in the short term.

Nevertheless, the Government understands that people across the UK are worried about the cost of living, and are seeing their disposable incomes decrease as they spend more on the essentials. That is why we have announced £37 billion of support for the cost of living this financial year. In addition to the Energy Price Guarantee, millions of the most vulnerable households will receive £1,200 of support this year, with additional support for pensioners and those claiming disability benefits.

If mortgage borrowers do fall into financial difficulty, Financial Conduct Authority (FCA) guidance requires firms to provide support through tailored forbearance options. The Government has also taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.

The latest available data from the Bank of England (published 14 June 2022) shows that the proportion of total mortgage loan balances with arrears in Q1 2022 was 0.82%, the lowest level since recording began in 2007. This is consistent with falling arrears levels over the previous 12 months.

The Government works closely with the regulators to monitor the resilience of mortgage borrowers and continues its efforts to support those in financial difficulty.

The Government offers Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit and protection in the courts under the Mortgage Pre-Action Protocol to help prevent repossession. This makes it clear that repossession must always be the last resort for lenders. Any borrowers worried about their mortgage payments should make early contact with their lender to discuss the forbearance options available to them.

The latest available data from the Bank of England (published 14 June 2022) shows that the proportion of total mortgage loan balances with arrears in Q1 2022 was 0.82%, the lowest level since recording began in 2007. This is consistent with falling arrears levels over the previous 12 months.

The Government works closely with the regulators to monitor the resilience of mortgage borrowers and continues its efforts to support those in financial difficulty.

The Government offers Support for Mortgage Interest (SMI) loans to homeowners in receipt of an income-related benefit and protection in the courts under the Mortgage Pre-Action Protocol to help prevent repossession. This makes it clear that repossession must always be the last resort for lenders. Any borrowers worried about their mortgage payments should make early contact with their lender to discuss the forbearance options available to them.

The Government and the British Business Bank are working with lenders on this issue and will publish data in due course.

I refer the noble Lord to the answer I gave him on 9 March to Question HL1776:

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2020-02-24/HL1776/.

The British Business Bank’s participation in peer-to-peer lending platforms has been primarily through the Bank’s commercial subsidiary British Business Investments. Data collected across the Bank’s programmes and delivery partners is consolidated on a programme-by-programme basis. The Bank does not record an overall rate of default given the wide range of delivery partners and products across the Bank’s programmes that are not directly comparable.

British Business Investments monitors existing delivery partners and their performance against contractual requirements, which includes monitoring the level of defaults, provisions, impairments[1] and write-offs observed through the life of each investment.

The level of default rates observed on the portfolio of loans generated through the peer-to-peer lending platforms have varied over the life of the investments to date, at times being below and at times being above the initial expected rate at the time of investment. Provisions are raised for defaulted loans but the actual level of losses associated with these defaults will be dependent on the level of recoveries achieved through the life of the investments as not all defaults will result in crystallised losses.

The level of losses provided for as a percentage of the net amount invested across the peer-to-peer platforms loan portfolio, is above the overall blended level[2] for the British Business Investments’ portfolio. This is as expected given the different risk profile and structure of the investments across the portfolio, all of which have been assessed within the Bank’s objectives and programme criteria.

Overall returns from investments through the peer-to-peer platforms have been positive and the Bank has not experienced any negative returns from the peer-to-peer platform investments liquidated to date.

[1] An impairment is an adjustment applied by a fund manager where a performance issue has been identified within a specific investment and are therefore included in the Net Asset Value submitted to the Bank.

[2] This includes the level of defaults, provisions, impairments and write-offs provided by peer-to-peer and non-peer-to-peer delivery partners.

Confidentiality agreements between the British Business Bank and peer-to-peer lenders do not deal with aggregated data relating to multiple different platforms. The British Business Bank does not aggregate peer-to-peer data from different platforms for reporting purposes. Given the very small number of peer-to-peer platforms we invest in, we could not publish aggregate default rates without compromising confidentiality in relation to individual platforms. In keeping with our commercial approach, we do however continually monitor the market and carry out extensive due diligence on any peer-to-peer lender before entering any commercial agreement with them. Once an arrangement is in place, we receive regular data on the performance of our loan book to ensure that this is in line with the contractual expectations we have made with them.

Different confidentiality agreements between the Bank and peer-to-peer delivery partners do not contain the same wording. The wording of each individual agreement is agreed jointly by the British Business Bank and the individual peer-to-peer lender, but they reflect delivery partner expectations, as is standard in the market.

Data provided to the British Business Bank (BBB) by its delivery partners to meet portfolio monitoring and reporting requirements remains commercially sensitive to the delivery partners and as such is governed by confidentiality agreements. An individual delivery partner may choose to publish data on the overall performance of their loan book, which may include but will not be limited to BBB backed investments. A list of BBB’s delivery partners can be found on their website.

The BBB’s Annual Report and Accounts (“Enabling Small Businesses to Grow and Prosper”) includes information on the BBB’s overall performance and is available on the website