At the time, it was too soon to say whether or not this was evidence of a reversal of the downward trend or a temporary fluctuation
But, over recent months, other factors have suggested that arrears may begin to rise again.
When you combine this with the fact that credit card debt is at record highs — with evidence that more and more people are relying on credit cards for everyday spending — we could be seeing the beginning of a more permanent trend.
Mortgage terms are now available up to 40 years, and people in their 50s, 60s and 70s can take out long- and medium-term mortgages.
While this fits with changing working lives, it could create a growing reliance on debt further into later life.
Significant downside risk
Earlier this month, the Association of Mortgage Intermediaries (AMI) announced that it believes mortgage arrears “present a significant downside risk over the coming years” and it has urged lenders to begin preparations.
It would be prudent for lenders to start to plan, with evidence suggesting that arrears and possessions are beginning to creep up, and AMI warning that changing employment dynamics, an ageing society and a steadily rising Bank Rate will have an impact.
AMI is concerned that the mortgage market is unprepared, particularly in a world where the execution-only model is being pushed and consumers are taking on additional borrowing without fully understanding the future financial consequences.
It’s clear that the mortgage market will need to shift to better serve consumers better.
But it needs to be careful not to allow history to repeat itself; where borrowers are allowed to take on mortgage debt that, realistically, they will never be able to clear.
