More difficulties for mortgage holders predicted
Published On 30 October 2007
The number of people struggling to pay their mortgage is set to increase significantly in the coming year, a new study has warned.According to the Council of Mortgage Lenders (CML), the number of mortgages more than three months in arrears will reach 145,000 by the end of the year and increase to 170,000 by the end of 2008.
As higher interest rates cause people to fall behind in their mortgage payments, the CML has also predicted that repossessions will increase over the next 12 months. The study estimated that 30,000 homes will have been repossessed by the end of the year and that this figure will rise by 15,000 over the course of the following year.
"The housing and mortgage markets are facing their most challenging period since Labour came to power a decade ago," commented CML director general Michael Coogan.
"We now expect a slower mortgage market next year, although by no means a stagnant one. Most borrowers will cope, but not everyone will escape unharmed from the effects of a slower market, so the government should make it a policy priority to overhaul the system of state support for home-owners, which has lagged pitifully behind the times."
There was some good news for people with mortgages in the CML figures. They suggested that interest rates will drop back to five per cent during 2008.
According to the Bank of England, total net lending to individuals in September totalled £11.2 billion and was higher than in August and above the previous six-month average.
