Delinquencies for troubled UK mortgages have increased 24% in the past year because of falling house prices and refinancing problems, says Standard & Poor’s.
The ratings agency said total delinquencies for UK nonconforming mortgages increased to a record level of 25% in the third quarter, up from 23.3% in Q2.
A year ago, delinquencies were 20.2%, meaning they have increased 24% in relative terms in the past 12 months.
S&P tracks the performance of 350,000 nonconforming mortgages. It said a nonconforming loan was a loan made by specialist lenders to borrowers with “adverse or limited credit history”.
Credit analyst Kate Livesey said: “In our opinion, the uptick in delinquencies has, to date, primarily been driven by affordability issues, an inability to refinance, and by house price declines.
“Recent cuts in the Bank of England base rate should improve the affordability of mortgage payments for those borrowers who have a loan product linked to this benchmark.
“However, the worsening economic environment is likely to result in further increases in delinquencies, repossessions, and losses for the UK nonconforming sector in the coming months.”
