Latest figures of Financial Services Authority reveal that the number of mortgage accounts in arrears has risen to 31% in the last year. There were about 377,000 accounts in arrears at the end of 2008. This means that struggling borrowers currently hold 3.4% of all the Mortgage Loans with their loans a little over £40bn. Report published by City Regulator reveals that recession, unemployment and dipping incomes have made borrowers difficult to repay their home loans.
According to FSA, borrowers are trying hard to make their repayments as the total amount of loan repayments are on the rise since 2007. Many lenders are still lending people who do not have a fixed income, which is a huge risk at such times. The self-certified mortgages account for 16.5% of new mortgages given to single-income applicants over the last three months of 2008 while 20% applicants use joint incomes. It is the self-certified mortgages that have spelled doom for the borrowers and lenders like Bradford & Bingley have been in trouble because of “liars loans” as many have exaggerated their incomes to get a mortgage.