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Thursday, July 18, 2024

Bank of England urged to cut interest rates as mortgage arrears rise

Propertymark has urged the Bank of England to cut interest rates as soon as practically possible following troubling statistics that reveal the number of mortgage arrears continues to rise.  

UK Finance revealed that approximately 93,680 homeowner mortgages were in arrears of 2.5 per cent or more of the outstanding balance in the fourth quarter of 2023. 

This represents a seven per cent increase in contrast to the previous quarter and 25 per cent more than the fourth quarter of 2022. 

Additionally, 30,750 mortgages were in the most alarming arrears band. This was a 4 per cent jump in contrast to the previous quarter and 8 per cent more compared with the same period a year before.  

Nathan Emerson, CEO at Propertymark, said:  “If the Bank of England meets its own inflation target of two per cent earlier than they planned, then they should look to reduce interest rates as soon as they can.

“Mortgage affordability is a critical issue at the moment, and Propertymark’s own Housing Insight Report found that many agents are selling below the initial asking price for homes due to mortgages becoming increasingly expensive as a result of higher interest rates and inflation.  

“Also, many landlords on variable or tracked rate mortgages are now struggling with rising mortgage costs and increased taxes against a backdrop of increasing legislation, ultimately making renting more expensive and forcing some landlords out of the sector completely.”  

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