Fears that bad mortgage debt could rise this autumn

CML’s forecast for 2010 repossessions has been revised from 53,000 to 39,000 while mortgage arrears in the first half of the year dropped by 5%.

But these positive figures could be painting a false picture and the autumn could see a return to bad debt mortgage, says John Fairhurst, managing director at free debt advice provider Payplan.

He continues:

“Low interest rates have driven down mortgage repayments but this bubble will burst and the prospect of higher interest rates is inevitable. Combine this with a rise in both the cost of living and unemployment and it could be a rocky time ahead.”

Mortgages debt continues to be a growing concern for debt advice providers such as Payplan with homeowners representing over 60% of new callers, a rise from 40% in 2008.

Mr Fairhurst adds:

“Despite historically low interest rates the proportion of homeowners calling us for help is at an all time high and for this reason we treat the CML figures with caution. Our own experience suggests it is a problem only in temporary decline."