Mortgage balances with arrears soared over 50% at the end of last year as high interest rates took their toll on homeowners.
Outstanding mortgage balances behind on payments hit £20.3 billion over the final quarter, the Bank of England reported on Tuesday, up 50.3% year on year and by 9.2% on the previous three months.
The proportion of the total loan balances with arrears rose from 1.12% to 1.23% to hit a seven-year high.
This comes after repeated hikes to base interest by the Bank of England last year as it battled to stem surging inflation.
Though mortgage rates have since started to come down as hopes build of base interest cuts soon, costs remain historically high for the roughly 1.6 million homeowners due for new deals this year.
“These are very alarming figures,” EHF Mortgages managing director Justin Moy commented.
“When arrears have been low for so long, any increase looks significant. It’s worrying though when we have so many borrowers yet to feel these higher rates.”
Bank of England data also showed the value of new mortgage commitments in the final three months of the year dropped by a fifth year-on-year to £46.0 billion.
Flagging demand for houses on the back of high-interest rates was blamed, with the central bank noting that the figure was the lowest observed since 2013 ignoring the pandemic.