Pre-delinquency insight vital in today's economic climate, says Experian

News release

Anna White / Sophia Mitchell
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Pre-delinquency insight vital in today’s economic climate, says Experian

Nottingham, UK, 22 July 2009 – The continued rise in mortgage arrears underlines the importance of pre-delinquency debt management, according to Experian®, the global information services company.

Council of Mortgage Lenders (CML) figures show that the economic downturn is already having a significant effect on mortgage arrears. The number of loans with arrears of more than 2.5 per cent of the mortgage balance rose from 182,600 in the fourth quarter of 2008 to 205,300 in the first quarter of 2009
[1]. It expects around 360,000 mortgages will be in arrears by the end of 2009[2].

Furthermore, UK labour market figures from the Office of National Statistics (ONS) indicate that the unemployment level was 2.38 million in the three months to May 2009, up 281,000 on the previous three months and up 753,000 on the year

Recent analysis of insolvency and court judgement data by Experian revealed that the majority of those consumers getting into serious financial difficulties during 2008 came from consumer types typically associated with young, working-class families. There was also, however, up to a 50 per cent year-on-year increase in the numbers of more affluent consumer types experiencing serious financial difficulties.

The analysis revealed that the highest concentrations of people getting into serious financial trouble are across of the West Midlands, Yorkshire and the North East, whilst the biggest year-on-year increases were seen across Scotland.

Simon Waller, Head of Collections, Experian UK & Ireland, explains: “The shifting economic landscape underlines why it is critical to use data and analytical insight to focus on customers showing signs of pre-delinquency.   This enables companies to better understand individuals’ circumstances and engage with at-risk customers using customised debt restructure plans that better reflect their financial circumstances. 

“By the time many homeowners are a few months behind on their mortgage, they are also likely to be several months in arrears on their utility, council tax and credit card bills. Failing to establish communication at an early stage with these individuals is likely to result in further missed payments and the customer being unable to recover their position.”

[1] CML (20 February 2009) Arrears and possessions in 2008.

[2] CML (22 June 2009) Positive revisions to CML housing market forecasts.

[3] ONS (15 July 2009) Labour market statistics.