Mortgages there maybe trouble ahead � let�s face the music without dancing

The Bank have England has warned that there may well be trouble ahead, with anticipated rates increases on the cards for next year.

It is anticipated that between 5-8% more households than those known about are in trouble with their mortgage repayments. It is believed that the actions of lenders are currently masking the real picture of borrowers in trouble.

The FSA has released a Financial Stability Report looking at the potential scale of the problem.

The FSA indicates that in excess of 5% of may well maybe have been in arrears for 6 months plus if not help by the lender. “That suggests that, in the absence of forbearance, the mortgage arrears rate might have been 0.5 percentage points higher at 1.7%, even at near-zero official interest rates.”

The report warns that “lenders who have exercised greater forbearance could be more exposed to losses in the event of a sharp deterioration in macroeconomic conditions”.

Yesterday's gloomy report also warned that mortgage borrowing costs are set to rise next year, as banks which are heavily exposed to risk in Eurozone countries raise the costs of lending to each other.

With increasing amounts of people now paring down their loans to avoid higher cost next year, when it is anticipated that repossessions will increase, as the economy continues to stagger from one month to the next.

This means that renting in Bristol will remain competative, and rents will remain high