The number of homeowners behind on mortgage payments is at its highest level in eight years
THE number of homeowners in arrears on their mortgages has reached its highest level since 2016.
Defaults have risen by 50.3 percent since last year, and by 9.2 percent on the previous quarter, with outstanding balances rising to £20.3 billion.
The big jump comes after homeowners saw their monthly mortgage bills double — or even triple — as they moved away from interest rates set in 2021.
Due to the higher interest rates, the average mortgage increased last year from 2.25 percent to no less than six percent.
But experts point out that this figure is still well below levels seen after the 2008 financial crisis, when £43.57 billion of mortgage debt was in arrears.
Around 1.6 million households had to refinance their fixed rates last year and faced an annual increase in housing costs of £2,300.
Economists said the higher interest rates would cost UK mortgage holders an extra £12 billion.
While there is hope that the Bank of England will cut interest rates, the Office for Budget Responsibility (OBR) has gloomily suggested that there will be no immediate relief for homeowners.
She predicts that mortgage interest rates will remain around four percent until 2027.
Mortgage rates are priced lower than bank rates, which are expected to fall to 4.2 percent by the end of this year and fall to 3.5 percent in 2027, according to the OBR.
The current bank rate is 5.25 percent, but the average mortgage rate rose to 5.76 percent last month.
Rachel Springall, financial expert at Moneyfacts, said: “Lenders responded to the change in swap rates, leading to numerous repricings of fixed rate deals. It has been a challenging time for borrowers and brokers.”
Industry experts have warned that homeowners will face mortgage pain for years as interest rate increases take longer to work their way through the market.
This is because Britain is largely dominated by fixed rate mortgages, rather than tracker loans.
Those with fixed rates will only face higher bills when it comes time to take out a new mortgage or move.
Lego makes a quidditch
Excitement among Muggles over Harry Potter figures and Fortnite sets helped boost sales at Lego, despite bosses saying this was “the most negative toy market in more than 15 years”.
Boss Niels B Christiansen said Lego beat its rivals last year, including Barbie maker Mattel, which had gotten a lift from the buzz around the blockbuster.
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Lego increased sales by 2 percent to £7.5 billion, although profits fell 5 percent to £1.95 billion.
Domino’s ambition of 700 stores
DOMINO’S is trying to eat its rivals’ lunch with a plan to open a further 700 stores in Britain over the next decade.
The pizza chain, which currently has 1,300 branches, wants to reach 2,000 by the end of 2033.
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This would make Domino’s bigger than McDonalds, but still lag far behind Greggs, which plans 3,000 locations.
Domino’s boss Andrew Rennie said he wants to boost sales by expanding the lunch business with a £4 meal deal, including a 600-calorie pizza and wrap.
Mr Rennie told The Sun: “In other countries Domino’s does 20 to 25 per cent of sales at lunch, but here it’s only about 15 per cent.
“That’s why we’re launching a £4 lunch offer with cheeky pizza and wraps, because we know people want a lighter option at lunchtime.”
The pizza chain is also buying out its largest Irish franchisee for £61 million.
Starling boss hire
DIGITAL lender Starling Bank has poached the boss of Ovo Energy as its new CEO.
Ovo, owned by billionaire Stephen Fitzpatrick, announced yesterday that Raman Bhatia would step down for a new leadership role outside the industry.
Minutes later, Starling Bank confirmed Mr. Bhatia’s appointment as CEO.
The recruitment comes in anticipation of a much-discussed stock exchange listing.
Aldi wage increase in price war
ALDI has increased staff wages again to fend off competition from competitors.
The discount supermarket said it wants to remain Britain’s “highest paying supermarket” and will increase the pay of store workers from £12 to £12.40 per hour – and for workers within the M25, wages will rise from £13.55 to £13.65.
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High street chains have spent tens of millions of pounds on increasing wages for their staff.
Aldi has spent £79m on raising wages this year and will recruit 5,500 new jobs as it plans to open more stores.
The move comes after a series of increases from Tesco, Sainsbury’s, Asda, M&S, Co-op and John Lewis.
The retail pay rises come despite official figures yesterday showing that UK wage growth slowed last quarter.
The Bank of England fears a wage spiral will lead to prices rising as companies pass on higher staff costs to consumers.
Emerging
US consumer inflation rose in February, dashing hopes for a rate cut.
The increase from 3.1 percent to 3.2 percent was due to higher food, medical care and housing costs.
The FTSE 100 ended higher despite hopes of a cut here.
Building blues for business
THE house building company Persimmon yesterday halved its annual profit and warned of a difficult year ahead.
Pre-tax profits fell from £730.7 million to £351.8 million.
The number of home completions fell by a third from 14,868 in 2022 to 9,922.
Persimmon chairman Roger Devlin said demand for housing remained high but “mortgage affordability and availability are difficult for many of our customers, especially first-time buyers”.
Persimmon was one of eight housebuilders targeted by the Competition and Markets Authority last month.
There were concerns it would share sensitive information that could affect house prices by reducing the supply of new homes.