Mortgage defaults in surprise decline

Date: Thursday 01 Jul 2010

There’s been an unexpected decline in the number of mortgage holders and larger businesses defaulting on loans, the Bank of England reports.

In the three months to early June, lenders found defaults continued the downward trend in place since the second half of 2009, according to the Bank’s Credit Conditions Survey.

The default rate is expected to remain broadly unchanged in the third quarter of this year.

“But many lenders commented that a deterioration in the economic outlook could cause the default rate to rise once more,” the report said.

The availability of secured credit to households had risen “slightly” in the second quarter, said loan providers, although availability is seen falling back in the next three months in the expectations that wholesale funding market conditions might tighten in that period.

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