Following five rises in the Base Rate within the past year, analysts have forecasted that lenders will announce a rise in the number of arrears in the coming weeks and months. Some analysts have predicted that losses could reach £500 million for 2007 and jump to £650 million in 2008.
According to the Council of Mortgage Lenders, repossessions rose by 66 per cent in 2006 to a total of 17,000 – an average of one in every 690 mortgage holders being unable to keep up repayments. The organisation anticipated repossessions to rise even further to 19,000 this year and to 20,000 in 2008.
Northern Rock and Bradford & Bingley have indicated that they expect to see an increase in the amount of mortgage arrears. According to Northern Rock’s interim results for the six months ending June 2007, the company increased its gross lending by 30.5 per cent, but arrears also increased across its range within the first three months of this year.
The report said: “As rates rise, it is inevitable that arrears will face upward pressure, particularly for those customers on variable rates. Customers on fixed rates are protected from rate rises until the end of the fixed term, when they potentially face an increase in rate as they switch product.”
Alex Hammond, PR manager at Kensington, said: “Lenders have a responsibility to treat customers fairly. By being sensible with criteria they can be flexible but responsible.”
Get the daily news delivered to your inbox
Find the latest industry jobs
