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BOE warns mortgage defaults to increase

January 5, 2008 by admin  
Filed under News, News-Mortgages

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Defaults on mortgage payments are expected to increase this year, according to the latest research from the Bank of England.

The Bank’s Credit Conditions survey revealed that borrowers and small-to-medium-enterprises are expected to find it increasingly difficult to source loans after the tightening of lenders’ belts due to the effects of the credit crunch.

The Council of Mortgage Lenders said that the findings increase the likelihood of a further cut in interest rates.

Bob Pannell, head of research at the CML, said: “This survey corroborates other evidence of worsening market sentiment. This may increase the chances of interest rate cuts sooner rather than later if inflation remains subdued.”

He recommended that consumers should re-evaluate their finances to avoid coming financially unstuck.

The number of borrowers who default on their payments is expected to the rise as a number of fixed rate mortgages expire over the next few months.

The Bank cut interest rates to 5.5 per cent last month, the first cut for two years.

Tags: economics, loan, mortgage payments, finance, source, head, belts, Financial crisis of 2007–2009

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