The Bank of England’s latest quarterly Credit Conditions Survey has revealed that lenders are fearing a further rise in defaults on secured loans.
In the run-up to the festive period it is expected there will be an increase in households defaulting on their mortgages.
Yahoo finance reported that Karim Haji, global and UK head of financial services at KPMG, said, “These latest figures suggest that many households are still struggling in the current environment. Although demand for unsecured lending remains stable, it is elevated compared to the beginning of the year.
“The decrease in default rates for unsecured lending is a positive sign and reflects the cautious approach to credit being adopted by households.”
Sarah Coles, personal finance columnist at Yahoo Finance UK and head of personal finance, Hargreaves Lansdown, said: “Mortgage default rates are mounting, and we’ve not yet reached the peak. Banks expect them to be up again by the end of the year.
“Given that those on lower incomes don’t tend to have mortgages, it demonstrates that higher mortgage rates are hitting middle-earners hard. Anyone who has overstretched themselves in the property market, or took on too many fixed costs while mortgage rates were lower, has faced a Herculean task when they remortgaged.”
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