Bank of England warns mortgage defaults will rise in coming months

The number of mortgage defaults is expected to rise in the coming months, according to the. bank of england Data released Thursday showed the number of new loans will continue to decline amid warnings that the ‘golden age’ of cheap deals is ending.

british central bank latest quarter Credit status survey Mortgage deal numbers have already dipped ahead of the prime minister’s mini-budget on Sept. 23, painting a bleak picture.

Kwasi Kwarteng’s underfunded tax relief package wreaked havoc on homebuyers, with hundreds of fixed-rate deals being withdrawn within days before lenders came back with significantly higher deals.

Lenders surveyed by the World Bank said secured credit, or mortgages, available to households declined in the three months to end-August and was expected to decline further in the three months to end-November. Data collected before the mini-budget found similar figures for unsecured personal loans and credit card borrowings.

Credit availability for businesses of all sizes was unchanged in the third quarter and was expected to deteriorate this quarter.

Mortgage rates have soared, according to Moneyfacts. This week, the average two-year fixed mortgage he hit 6.46%, the highest since the 2008 financial crisis.

“We are at the end of the golden age of cheap mortgages, and further interest rate hikes seem to be on the horizon,” Myron said. For many of us, home ownership will become more expensive,” said Jobson, a senior personal finance analyst at investment platform Interactive Investor.

Samuel Toombs, chief UK economist at Pantheon Macroeconomics, said: murmured: “Lenders were preparing to tighten access to mortgages even before the mini-budget, according to the Bank of England’s credit investigation. But the mini-budget has greatly accelerated the pace of deterioration. Good luck to those who refinance now.”

According to a World Bank study, mortgage default rates were expected to rise slightly from July to September and to rise further from October to December. cost of living increases.

Mr Jobson said:

“The new data shows a mixed picture of declining and cooling demand for home buying in the UK as house prices remain stubbornly high and mortgage rates rise to levels not seen since before the financial crisis. Supporting the findings of the Home Price Index – a lot of pricing coming from the real estate market. The casualty could be deals, not house prices.”

However, house values ​​are expected to fall eventually. Some analysts including Capital Economics UK house prices forecast to fall 15% to 20% next year.

The Royal Institute of Chartered Surveyors warns Homeowners struggle to keep up with mortgage payments Foreclosures will increase next year as the UK’s 13-year boom in the housing market comes to an end.

Buyer demand (as measured by inquiries about homes for sale on Zoopla) has fallen by more than a fifth in the past two weeks as mortgage rates skyrocketed due to mini-budgets. The property’s website reported“Mortgage rates were set to rise from 4% to 5% in 2022 before the mini-budget.

“This, combined with the rising cost of living, had begun to dampen demand for homes over the summer. This increase will hit the purchasing power of mortgage buyers by 25-30%.”

The commercial real estate market will also take a hit. Goldman Sachs expects prices to fall between 15% and 20% between June and the end of 2024 this year, with developers struggling as borrowing costs soar. said he would.

Leave a Comment