Mortgage hell latest: 'Devastating impact' laid bare as UK sees biggest increase in defaults since 2009

The figure was 14 points lower in the first quarter of 2023.

The latest data, which was published yesterday, is the highest recorded by the survey since it topped 60 in mid-2009.

The survey measures mortgage defaults by asking lenders to report comparative changes and assigning scores based on their response and market share.

Lenders also fear demand for mortgages will fall sharply in the next financial quarter.

The availability of mortgages and non-mortgage credit to UK households could also plummet but credit available to businesses is expected to remain unchanged.

The Bank of England said: “Lenders reported that losses and default rates on secured loans to households increased in Q2, and were expected to increase in Q3.”

The findings come as a further blow to mortgage-holders as nearly a million homeowners can expect to see their monthly repayments soar by £500 or more by the end of 2026.

Mortgage rates and interest rates have continued to increase over recent months as the Bank of England grapples with persistently high levels of inflation.

The average two-year fixed-rate mortgage now stands at 6.75 per cent and the average five-year fix hit 6.27 per cent.

More than 75,000 homeowners were also behind on their mortgage payments in the first three months of the year, lobby group UK Finance has revealed.

The Bank of England has raised interest rates from 0.1 per cent in December 2021 to five per cent.

The situation is not expected to get much better for Britons.

Charlotte Harrison, head of mortgage products at Skipton Building Society, told MPs on the Treasury Select Committee earlier this week: “Over the next six months we will see more customers with financial stress.”

Andrew Assam, homes director at Lloyds, added: “We won’t lend people as much as we would have done historically because rates are much higher.”