NewsRescue
According to Bank of England data released on Tuesday, a growing number of British homeowners are falling behind on loan payments, with mortgage arrears increasing by 13% in the second quarter of the year to the highest level since 2016.
The value of home loans with late payments increased by 29% year on year to £16.9 billion ($21.1 billion), as rising interest rates and unemployment have put strain on consumer disposable incomes in recent months.
“The rate at which mortgage arrears are increasing is terrifying and should cause the Bank of England to pause at the next interest rate meeting,” Lewis Shaw, founder of Mansfield-based Shaw Financial Services, told Newspage. He predicted a “mortgage meltdown” unless the regulator changed its stance.
The Bank of England has been raising interest rates in an effort to curb increasing inflation, which has exacerbated the country’s cost-of-living crisis. However, because mortgage holders are paying greater interest, this makes house loans more expensive to repay.
“This is dire data, and we know it’s about to get a lot worse,” Shaw continued. “1.6 million mortgage holders are due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade.”
Mortgage lending was also down in the second quarter of the year, with gross advances down by $7.8 billion to $65.3 billion, according to the data. Borrowing has fallen by nearly a third year on year, to the lowest level since the worst of the Covid-19 loan crisis in the second quarter of 2020.