The number of British households falling behind for the first time with their mortgage payments eased in the first quarter of 2009, helped by lower interest rates, the Financial Services Authority said on Monday. There were 60,000 new arrears cases in the first three months of the year, down from 68,000 in the final quarter of 2008, the FSA said in its latest set of quarterly mortgage statistics.
Government pressure on lenders to pass on aggressive Bank of England interest rate cuts has helped offset a sharp rise in borrowing costs in the aftermath of the credit crunch. However, some borrowers are still struggling to service their debts because of rising unemployment and falling or stagnant wages as the economy contracts.
The total number of mortgage accounts in arrears rose to 399,000 by the end of March, the FSA said, an increase of 6 percent compared with three months earlier, and up 33 percent on the year. That pushed bad mortgage loans as a proportion of all residential borrowing to 3.64 percent, an increase of 1.23 percentage points compared with the first quarter of 2008.
The increase in arrears is forcing banks to write off more of their mortgage loans, putting them under added pressure as they grapple with the effects of last year's banking crisis. The FSA also said there were 14,825 home repossessions in the first quarter, up 13 percent compared with the previous quarter, and 62 percent more than in the same period last year.