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Mortgage collapse looming in UK – data — RT Business News

A growing number of British households are falling behind on their loan payments, with mortgage arrears jumping 13% in the second quarter of the year to their highest level since 2016, according to Bank of England data released Tuesday.

The value of overdue home loans reached £16.9 billion ($21.1 billion), up 29% from the previous year, rising interest rates and unemployment in recent months having put pressure on household disposable income.

“The rate at which mortgage arrears are rising is terrifying and should prompt pause at the next Bank of England interest rate meeting,” Lewis Shaw, founder of Mansfield-based Shaw Financial Services, told the Newspage news agency. He warned that a “mortgage collapse” was going to happen unless the regulator changed its approach.

The Bank of England has raised interest rates in a bid to contain rising inflation, worsening the country’s cost of living crisis. However, this makes home loans more expensive to repay as mortgage holders pay higher interest.

UK house sales set to hit 12-year low

“This is dire data, and we know the situation is about to get much worse with 1.6 million mortgage holders due to renew over the next 12 months at rates significantly higher than those that anyone has been accustomed to for over a decade”, Shaw added.

The data showed that mortgage lending also declined in the second quarter of the year, with gross advances falling by $7.8 billion to $65.3 billion. Borrowing fell by almost a third in annual terms, to its lowest level since the worst Covid-19 lending collapse in the second quarter of 2020.

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