UK Mortgage debt crisis starting to bite as 3/4million default

According to the UK’s Citizens Advice charity at least 770,000 householders missed paying one or more mortgage repayments in the last year.

Citizens Advice warned that the debt crisis in the UK was getting worse, with the charity having to deal with over 1.25 million cases of debt problems last year.

The crisis is starting to get bigger, but has been discounted by many in the lending market where the pressures to extend loans has led to many borrowers being advised to stretch themselves beyond their capability to pay.

A Citizens Advice study found that younger people were the most likely to fall behind on financial commitments, with 13% of those aged 21 to 24 missing a home loan payment.

Most analysts expect the Bank of England to hike rates again this year from 4.75 per cent before the end of the year. Soaring house prices have forced first-time buyers to stretch to get on the property ladder.

David Harker, chief executive of Citizens Advice, said: "There is a clear need for more information and advice about the consequences of taking on financial commitments, particularly for younger adults."

The research also found that 2.6 million people who currently rent their home aspire to own a property but do not think they will ever be able to raise enough money.
A further 5.5 million said they did could not afford a home at present but hoped to buy in the future.

At the same time today, the Office of National statistics announced that UK unemployment was at a six year high, rising by 93,000 to 1.7 million in July.

As we’ve outlined before, there will not be one cataclysmic event that will bring about the bursting of the housing market bubble, but a confluence of seemingly small events that when added together will propagate a serious crash in the market, this goes beyond a pure ‘market confidence’ issue.