Mortgage arrears 'set to rise'
Mortgage arrears 'set to rise'
Tuesday 21st October 2008
Residential property has been one of the sectors hardest hit by the credit crunch, with statistics compiled by Nationwide showing the average house price in the UK has fallen by 12.4 per cent to £161,797 in the past 12 months.
This trend has resulted in negative equity again becoming a problem, which Homeowners Advice Centre's Al Elliot predicted would have serious consequences.
People reaching the end of fixed-rate mortgages will be unable to remortgage due to banks tightening lending criteria.
They will then be left with no choice but to accept higher repayment terms because being in negative equity means selling their home will not be a viable option.
"In the next few months, I suspect a lot of lenders will see large increases of instances of arrears as repayments jump to standard variable rate and homeowners struggle," said Mr Elliot.
The Council of Mortgage Lenders recently predicted that 45,000 homes would be repossessed during 2008.
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