Mortgage arrears in the UK jumped by almost a third between April and June compared with the same period last year, the Bank of England says.

One broker has described this as “terrifying.”

Outstanding mortgage debt is now £16.9 billion, the highest since 2016.

The Bank says new arrears cases equated to 16 per cent of the total outstanding mortgage debt in April to June, and claims this jump is the highest since 2018.

However it’s worth remembering that arrears – defined as borrowers failing to make contractual payments equivalent to at least 1.5 per cent of the outstanding balance or where the property has been repossessed – are still low compared with the 2008-09 financial crisis.

Lewis Shaw, founder of mortgage broker Shaw Financial Services, describes the speed at which mortgage arrears are increasing as “terrifying” and adds: “This is dire data, and we know that it’s about to get an awful lot worse, with 1.6m mortgage holders due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade.”

And Riz Malik, director of Southend-on-Sea-based broker R3 Mortgages, comments: “The swift escalation in [Bank of England] rates was bound to significantly impact default rates, and it’s likely the situation will deteriorate further”.

Simon Gammon, managing partner at Knight Frank Finance, says: “While mortgage payments at today’s rates are painful and require borrowers to cut their discretionary spending, they are still technically affordable. That’s going to keep arrears low despite steep increases in mortgage rates.”

He says the buy to let sector is more likely to see arrears, as landlords suffering from unaffordable mortgages had limited choices – either sell or default.

The Bank of England meets in a week’s time to consider whether to raise rates for the 15th successive time.