Number of Home Loans in Arrears Increases

Fri, 20 Mar 2009

New figures from the Financial Services Authority have revealed that the number of mortgages in arrears has increased by 31 per cent in the past year. At the end of 2008, there were 377,000 accounts in arrears by 1.5 per cent or more of their loan balance – equating to roughly three months repayments . That figure means that 3.4 per cent of all mortgage loans are currently in trouble, worth a total of more than £40 billion.

The FSA said, ‘With borrowers increasingly struggling to clear their arrears, the total number of loan accounts in arrears has been steadily increasing since early 2007.’ The increase in arrears can be attributed to the recession growing unemployment and falling incomes, whilst the falling housing prices aren’t helping matters.

The government’s own house price index revealed a growing annual rate of decline for UK property prices in January. The index, published by the Department for Communities and Local Government (DCLG) and is based on home sales completed in January, revealed that prices were 11.5% lower than in January 2008, a faster rate of decline than the 10.2% annual fall seen in December. This took the price of the average UK property down to £195,724, a fall of £26,034 in the past year.
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