Missing mortgage payments signal first sign of crash
Worries of a house price crash rose yesterday after the Bank of England issued an unexpected warning of an asset price correction and new figures showed the first rise in mortgage arrears for six years
The figures show that during the second half of last year the number of mortgages three to six months in arrears increased from 49,700 to 53,960. In total, there were around 92,000 mortgages that were overdue by more than three months.
Hometrack, the property website, said house prices had fallen for the seventh consecutive month in January. The average property price fell by 0.4 per cent compared with December. The figure contradicts anecdotal evidence of a surge in interest in the new year.
A typical 25-year, £100,000 repayment mortgage has gone up by nearly £80 each month, or nearly £1,000 a year, as the standard variable rate has jumped from 5.5 per cent to 6.75 per cent, according to figures from London & Country Mortgages.
Michael Coogan, director of the Council of Mortgage Lenders, said: "With short-term arrears now increasing we are bound to see a rise in longer-term arrears and possessions following behind, although we do not expect a dramatic increase.
"Anyone facing financial difficulties should talk to their lender as soon as possible. Lenders try to treat arrears as sympathetically as they can. The sooner borrowers seek assistance, the more likely it is that lenders will be able to help."
The council said that the number of repossessions, which has been stable at around 3,000 every six months, is also likely to increase, having reaching "the bottom of the cycle".
More on mortgages for freelancers.
28th January 2005