Missed repayments at record level

The credit crunch has seen record numbers of people failing to keep up with repayments on sub-prime mortgages during the second quarter of this year, figures have shown.

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Standard & Poor's Rating Service said 23.31% of people with non-conforming mortgages were now in arrears, up from 22.17% during the previous quarter and the highest level it had ever recorded.

It added that 12.12% of people were now more than 90 days behind with repayments, up from just over 11% three months earlier.

The group attributed the rise to the problems caused by the credit crunch, which have led to steep rises in interest rates for people who do not qualify for mainstream mortgages.

Tighter lending criteria have also made it harder for people in this segment of the market to remortgage to better deals when they come to the end of a deal and revert to a higher rate.

Credit analyst Kate Livesey said: "The rise in delinquencies is being driven by affordability pressure, especially for those borrowers whose loans are resetting to higher floating interest rates.

"In the past, they would have had a wide range of refinancing options, but the sharp contraction in credit availability means refinancing is more difficult, and some borrowers are now struggling."

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