Mortgage default rates rose in the three months to the end of September and are expected to do so again in the last three months of 2024.

The recent rise in default rates was lower than the banks had expected. However, in the last three months of the year, default rates are expected to rise faster than any time since Q3 2023.

Default rates on unsecured lending, like credit cards, fell.

The data comes from the Bank of England credit conditions survey for July-September 2024.

In response Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, says: “Mortgage default rates are mounting, and we’ve not yet reached the peak. Banks expect them to be up again by the end of the year.

“Given that those on lower incomes don’t tend to have mortgages, it demonstrates that higher mortgage rates are hitting middle-earners hard. 

“Anyone who has overstretched themselves in the property market, or took on too many fixed costs while mortgage rates were lower, has faced a Herculean task when they remortgaged.

“The HL Savings & Resilience Barometer showed that 13% of households who have had to remortgage onto higher rates have poor financial resilience, and on average they have just £315 left at the end of the month – £95 less than those who have yet to remortgage.

“The positive news is that mortgage rates are falling, so there’s a smaller step-up in monthly payments when people remortgage. However, these figures clearly show that for an awful lot of people, this is too little, too late.”