That’s according to data from Eligible, the AI-driven mortgage servicing business.
It revealed that 492,000 mortgage holders are set to miss a payment in the next six months.
Eligible said its findings mirror Bank of England data that shows mortgage defaults are rising and expected to continue going up.
The bank’s Credit Conditions Survey for the second quarter of this year found an increase in defaults, with an additional rise expected in the third quarter.
It added that the majority of top 10 mortgage lenders are accounting for a 22% spike in mortgage defaults over the course of 2024.
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Why the rise in missed payments?
There has been a rapid and large rise in mortgage rates over the last two years, driven by the Bank of England’s consecutive interest rate hikes sending mortgage rates soaring. This is in addition to the wider cost-of-living pressures.
Eligible said that a further 670,000 mortgage holders have already missed a payment in the past 12 months.
Financial stress
A significant 5.4 million Brits cited their mortgage as a significant cause of finance-related stress alongside spiralling costs.
A huge number (1.3 million) admitted they don’t understand the terms of their mortgage but don’t communicate with their lender.
Zahra Hassan, co-founder of Eligible, said: “The fundamental problem is that mortgages are a financial product that customers take out only once every three to five years. This means that they aren’t regularly engaging with their mortgage lender and aren’t in the loop of what all their options are.
“In a broader sense, rising interest rates, coupled with increased energy and living costs, heighten vulnerability to default. However, the key factor that pushes someone from financial strain to actual default is their lack of awareness about the array of options that their bank could have offered to temporarily ease their financial burden, particularly on their largest financial obligation – their mortgage.”
