Mortgage defaults to rise during first quarter

Mortgage defaults in the UK are set to rise over the first quarter of the year according to officials from the Bank of England. Officials state that a number of issues are putting additional strain on household finances, and coupled with the effects of the credit crunch and tighter lending conditions, this is likely to impact significantly on mortgage default levels.

According to the Bank of England consumers found it very difficult to get finance in the final quarter of last year, and lending conditions are set to get worse as lenders tighten their belts in light of the turmoil in the financial markets. This will make it increasingly difficult for consumers to get affordable finance.

In a separate report the Bank of England recently stated that close to a million homeowners were struggling with their mortgage repayments, and with the base rate remaining static for this month and a range of other living costs rising the situation is likely to get worse.

Homeowners and industry officials are now keeping their fingers crossed for a rate cut in February, which could help to ease financial strains and cut back on the number of homeowners putting themselves at risk of repossession due to defaults.