© Reuters
The Financial Conduct Authority (FCA) warned that 770,000 households are either at risk of missing mortgage payments over the next two years or are already behind.
Furthermore, the FCA estimated that up to an extra 570,000 mortgage borrowers may face payment shortfalls over the next two years.
The data were disclosed in a Treasury Committee communication published on Wednesday as part of the FCA's response to queries asked during a recent accountability hearing.
According to the letter, there will be about 200,000 controlled mortgages in payment default by the end of June 2022.
The letter also stated that the figure is "subject to changes in interest rates," taking into account market forecasts in September 2022.
According to Nikhil Rathi, the FCA's chief executive, many of these homes are already thousands of pounds behind, with 117,000 borrowers failing to pay a sum equal to more than 1.5 percent of their mortgage total.
The warning will raise further concerns that a flood of forced property sales may drive down house prices in the coming months.
This is happening amid the biggest living standards squeeze on record, as households have been battered by rising interest rates and the sharpest inflation in 41 years.
Rathi stated that the number of defaults will be determined by how many people lost their jobs this year, with the economy anticipated to enter a recession that would persist until at least the end of 2023.
On its account, the Bank of England has also warned that millions of homeowners with fixed-rate mortgages would see their payments climb by £3,000 a year as borrowing costs rise and Threadneedle Street fights to keep inflation under control.
Monthly mortgage payments for more than 800,000 homeowners will triple this year, according to official estimates released this week.
Rathi predicted that some people at risk of default would adjust their spending patterns in order to avoid missing mortgage payments.
Comment: With energy prices near doubling and food prices surging, and with no end in sight, there's only so much 'adjusting' people can do to their budget, before bankruptcy beckons.
The FCA underlined that repossession statistics are now "low". While the most recent numbers have been distorted by a backlog in the courts owing to the epidemic, the FCA said there were 835 repossessions in the three months to June, which Rathi has described as "an incredibly low amount."
Comment: Considering the turmoil the economy has suffered in the last few years the low number of repossessions is an anomaly, and therefore is likely an ominous, rather than hopeful, sign.
According to the Resolution Foundation, a drop in housing values will leave nearly 140,000 young people living in homes worth less than their mortgage.
On its account, the Office for National Statistics showed that an estimated 1.4 million homeowners may need to remortgage this year.
Reader Comments
But Klaus seems somewhat arrogant and stupid.
I especially disagree with the "be happy" part. At the very moment, it does not at all appear to be the case.
The only trouble is, Russia, China, and increasingly the rest of the Global South have decoupled from the Western banking system. They will not be dragged down as intended. No "Great Reset", just a small Western one ...
If they want your houses, let them maintain them, insure for damage, decorate, furnish, use gas or electricity inside and any losses become theirs, with free money they will always have someone to maintain it, yes? LOL it reminds me of the first class failures of late. The mega rich seem to be missing something don't they. They seem a little worried about getting from Glasgow to London, which previously was only a 2hr train ride away, I guess if you rich pile together you can go halves on a helicopter, because you will always have the maintenance and labour covered, right?
I have lived now since 1997 as a non home owner, I saw no benefits of investing in anything once these idiots got in charge of property.
Local communities take little time to develop, which goes against both popular opinion and the country saying that they take years, NO. Communities (which I will define here as an area of cohesive likeminded mutually unburdonsome permenant residents) are created by the level of love and trust that is shared, the elements are far removed now from the mere physical and material aspect being brought to our attention in this article, the property itself is just a piece sitting amongst a game of "I Lordy you" but the players fight over that title to become financial insurers of the unknown, while the unpredictable events that upset that applecart becomes increasingly more observable.
Foxes do have holes, Yeshua was right about them too! :-) have a great weekend everyone! Big dominoes match soon, getting really excited.
Good luck on your domino match and if I may make a suggestion, let me suggest this as your first placement.
[Link]
Still, the game is yours to play as you see fit.
Ken
Figure out a way is what I would say to all those underwater and wondering how the bills will be paid because us peasants - we got to stick together.
Ken