UK Mortgage Defaults Increase

July 11th, 2008 | mortgage news-

The number of defaults on UK mortgages has more than doubled in the past year to 77,000 households.

Part of the problem is that housing costs have been taking a bigger % of people’s disposable income in the past few years. According to the consumer credit counselling service housing costs have risen from 33% of disposable income to 44%.

Why Mortgage Defaults has increased

People stretched themselves to get on property ladder. (house prices trebled in 1996-2007
Increasing Council Tax
Rising levels of unemployment. Unemployment rates are forecast to rise sharply over next 12 months as recessions takes hold
Interest rates still higher than 2005, 2006
Higher levels of other debt such as credit card debt.
Falling house prices, leaving investors exposed

This increase in mortgage defaults is likely to cause a rise in the UK sub prime market, even though their are concerns the UK housing market could be mirroring the US housing market.