Many more homeowners are set to fall into mortgage arrears during the next few months, Nationwide has warned.
The building society says it expects people with home loans to extend the term, switch to interest-only or ask for a repayment holiday.
The cost of living is still having a massive effect on people’s household budgets leaving them unable to afford the mortgage repayments, the lender says.
Many people already have arrears which are growing fast as they sink further into debt.
The proportion of Nationwide’s ‘mortgage book’ where the borrower is more than three months behind on repayments rose from 0.32 per cent to 0.38 per cent, it is reported.
New arrears were concentrated in buy-to-let mortgages and in what the society calls its ‘legacy’ portfolio of self-certificated mortgages.
“Further increases in arrears from current levels are expected, due to both inflation and higher interest rates negatively impacting household finances,” it said.
Debbie Crosbie, CEO at Nationwide, says the level of arrears is low by historic standards, and when compared to other lenders in the industry.
Nationwide, which is one of the largest mortgage lenders, says it still expects the amount it loses due to borrower defaults to fall to £18 million from £54 million.
It has £202 billion of outstanding home loans and 1.4 million borrowers, but it has cut back on lending, reducing new mortgages from £5.4 billion to £500 million, but maintained its market share at 12.2%.