Bank of England sends stark warning to anyone with a mortgage
The Bank of England’s latest data shows that more Britons are falling behind on their mortgage payments than at any other time in the last seven years
More Brits are falling behind on their mortgage payments than at any point in the past seven years, according to the latest data from the Bank of England.
The lingering financial impact of the pandemic and soaring cost of living have left many struggling to cover basic expenses, let alone repay debts. The bank’s report for Q1 2024 showed that mortgage balances in arrears rose by 4.2 per cent compared to the previous quarter, totalling a staggering £21.3 billion. This represents a shocking 44.5 per cent increase from the same period last year.
Furthermore, the proportion of total loan balances in arrears relative to all outstanding balances also increased, rising from 1.23 per cent in the last quarter to 1.28 per cent. This is the highest level seen since Q4 2016.
However, there was some positive news in the report. The outstanding value of all residential mortgage loans fell by 0.1 per cent from the previous quarter, marking a 1.4 per cent decrease compared to a year ago. The total value of outstanding mortgages currently stands at £1,654.9 billion, reports Bristol Live.
A borrower is considered to be in mortgage arrears when they miss their mortgage payments, which is recorded on their credit file. Missing multiple payments can lead to property repossession, but help is available for those struggling to keep up with their debts. Money Saving Expert reassured the public that typically, repossession is only considered as a “last resort” by mortgage lenders, who would much rather “prefer you to repay”. They stated that major lenders wouldn’t seize a property until at least a year after the first missed payment remains unresolved.
When a home is repossessed, usually lenders put it up for auction for a quick sale. But if the winning bid doesn’t cover what’s left on the mortgage, borrowers might still be pursued by the lender to makeup the difference.
Given this, MSE recommended homeowners to consider selling their property themselves if they have sufficient time as this can quite often secure a far better price. Moreover, this could prevent a repossession from being registered against them, which could potentially impact their chances of securing future mortgages.
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