Mortgage difficulties still relatively rare

Published: December 17, 2007

The percentage of borrowers reporting problems in keeping up with mortgage repayments has remained low this year, though repayments are beginning to rise, according to new research.

Figures published today (December 17th) by the Bank of England revealed that while 16 per cent of people holding fixed rate mortgages came to the end of their existing deal in the past 12 months, 21 per cent did not have to increase their repayments for any new deal.

However, homeowners with variable rate mortgages experienced an average increase of eight per cent in their monthly repayments, with the mortgage interest rate changes across the market equalling an increase of £900 million per quarter in total repayments.

Charles Bean, chief economist at the Bank, said: "The survey suggests that around half of mortgagors experiencing an increase in mortgage payments had cut back their spending.

"But the proportion of mortgagors reporting difficulties in paying for their mortgage remains relatively low and appears to have changed little over the past year," he added.

Last month the Financial Service Authority stated that as many as 1.4 million homeowners are set to come to the end of the current fixed term mortgages next year.