Arrears & Possessions (UK Finance) - comment from Target

15 May 2025

Melanie Spencer, the sales and growth lead for fintech Target group, said:

“Arrears may look good now but employment levels deteriorated in March. Chancellor Rachel Reeves’ £20bn tax raid on employers has squeezed firms’ profits and figures released by the Office for National Statistics have revealed the number of payrolled employees fell by 53,000 over the first three months of the year. Their early estimate of payrolled employees for April showed a decrease by 33,000. The number of job vacancies has also fallen again, with the rate of decline increasing in the last few months. The business case for hiring has been weakened by a perfect storm of last month’s increased employer national insurance contributions and above-inflation increases to the minimum wage, alongside a wave of measures in the Employment Rights Bill which will make hiring staff riskier and costlier. The labour market is clearly cooling.

“Weakening labour market activity will inevitably feed into an increase in greater arrears in the future. That’s coming at banks and building societies fast – and when it arrives, unprepared lenders will feel like they’ve been hit by an express train. Owner occupiers and landlord borrowers will need the support; lenders will need the right systems in place to manage processes proactively. Early contact and remediation are key to keeping repossession a last resort and achieving better outcomes for borrowers and lenders alike. That requires investment in systems.”