Mortgage crisis looms in the UK – Data – RT Business News

Bank of England data showed on Tuesday that an increasing number of British families are defaulting on loan payments, with mortgage arrears rising by 13% in the second quarter of the year to their highest level since 2016.

The value of home loans in arrears rose to £16.9 billion ($21.1 billion), up 29% from last year, as rising interest rates and unemployment in recent months put pressure on households’ disposable income.

“The speed at which mortgage arrears are rising is alarming and should give cause for pause at the next Bank of England interest rate meeting.” Louis Shaw, founder of Mansfield-based Shaw Financial Services, told Newspage. A. warned “Mortgage crisis” It will come unless the regulator changes its approach.

The Bank of England has raised interest rates to curb rising inflation, which has exacerbated the country’s cost of living crisis. However, this makes repaying home loans more expensive as mortgage holders pay higher interest rates.

“This is worrying data and we know it will get worse, as 1.6 million mortgage holders will have to renew their mortgages in the next 12 months at interest rates far higher than anyone has been used to for more than a decade.” Shaw added.

Mortgage lending also declined in the second quarter of the year, with total loans falling by $7.8 billion to $65.3 billion, the data showed. Borrowing shrank by about a third year-on-year and is at its lowest level since the worst lending collapse due to the coronavirus in the second quarter of 2020.

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