According to a Bank of England survey of lenders people have already started to default on their mortgages over the past few months which is expected to soar in the coming months.
Figures released by UK Finance shows that around 2.4 million fixed rate mortgages are to come to an end between now and by the end of 2024.
Figures released by Moneyfactscompare.co.uk on Thursday shows that the average two-year fixed rate mortgage for homeowners is 6.75% and a five-year fixed offer is 6.27%.
Myron Jobson, senior personal finance analyst at interactive investor, said: “The latest (Bank of England) poll of lenders lays bare the devasting impact the mortgage crisis and stubbornly high inflation is having on personal finances.”
He said rising mortgage rates have pushed tight household budgets “to breaking point, evidenced by an uptick in losses and default rates on mortgages”.
He added: “It is therefore unsurprising that lenders are expected to tighten their belts and reduce the supply of home loans as a pre-emptive measure to offset anticipated credit losses.”
Riz Malik, director of Southend-on-Sea-based mortgage broker R3 Mortgages, said: “It is highly troubling to see that the rates of default on secured loans are escalating and are anticipated to rise further. Equally distressing is the projection from the Bank of England that the supply of secured credit is set to diminish in the forthcoming quarter.”
Justin Moy, founder at Chelmsford-based mortgage broker EHF Mortgages, said: “This latest Bank of England survey confirms what we are facing at the moment, namely demand for mortgages reducing, increasing defaults and missed payments and less appetite to borrow generally.”
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