Over 20% of sub-prime homeowners in the
UK have mortgage arrears of more than 30 days and total delinquency index rose to 21.73% in the first quarter of the year, compared with 19.41% in the previous quarter and 18.11% in the first quarter of last year.

Even those with excellent credit histories are also facing difficult times. Delinquency rates among prime mortgage holders rose to 2.41% in the first quarter compared with 2.11% in the previous quarter.

These figures reveal the extent to which homeowners are struggling amid rising utility bills and increased fuel costs.

Over £13 billion of loans held by both prime and sub-prime borrowers are now in default in the
UK.

A raft of problems have been identified as problems in the UK mortgage market including a reduction in refinancing opportunities for borrowers, the large proportion of loans (around one quarter) due to revert from fixed or discount rates in the first half of 2008 into an environment of reduced credit availability, and the slowing economy. These are likely to keep delinquency figures high for the foreseeable future. Despite cuts in headline interest rates, lenders’ funding costs have remained elevated, which in turn has kept mortgage rates, and therefore payments, high. There is no end yet in sight to this problem.

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