The Financial Services Authority has warned that around 310,000 borrowers are behind on mortgage payments and repossessions have soared by 71% compared to last year.
The financial watchdog’s report on mortgage lending shows the number of borrowers not paying back their loan jumped to 310,000 in the second quarter of 2008 from 270,000 in the same period last year - a jump of 13.5%.
The number of loans in arrears jumped by 10,500 in the first quarter of 2008 alone. Now problem mortgages account for 2.58% of all outstanding home loans.
The number of homes being repossessed by banks shot up by 71% in the last year, according to figures the FSA took from 300 mortgage lenders and administrators. Repossessions jumped to 11,000 in the second quarter from 6,500 in the same period of 2008 and from 9,100 in this year's first three months.
The government issued new court rules last week which it claimed would make repossession the last resort for banks.
Some homeowners are struggling to meet mortgage payments because of the sharp rise in mortgage rates plus growing food and energy bills. The Bank of England today warned many first-time buyers are being forced into negative equity by house prices which have fallen 12% since their summer 2007 peak and mortgage rates may jump by 2% for some high-risk borrowers.
The figures from the FSA show the continuing fall in mortgage lending with gross advances dropping by 26% in a year to £72 billion in the second quarter from £96 billion in the same period of 2007.
The FSA defines a mortgage in arrears when the borrower has missed payments which add up to 1.5% of the total loan. The financial watchdog said it used this measure because figures based on the number of months behind on payment can be affected by changes in interest rates.
CITYWIRE.CO.UK
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