More people expected to default on mortgage debt

In its latest Credit Conditions Survey, The Bank of England said it expects more people to default on their mortgage debts over the next three months, The Telegraph reports.

It suggested that lenders were `concerned about "the potential impact of increases in interest rates on default rates"`.

The news comes as a major lender looks to prevent people defaulting on their mortgage debts by tightening up the criteria on interest-only mortgages.

Spokesperson at mortgage brokers Private Finance, Melanie Bien, commented: "By switching from repayment to interest-only, homeowners can significantly reduce their monthly costs which may make the difference between keeping the roof over their heads or falling into arrears and possibly losing their home to repossession. By severely restricting the availability of interest-only deals, lenders may be denying desperate homeowners a vital lifeline."

An expert on debt at Gregory Pennington added: "We would advise anyone struggling with their mortgage payments to seek advice without delay. The consequences of failing to repay secured debt are far more serious than those attached to unsecured debt, so it`s vital they address the problem as soon as possible."

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