Lenders have been advised that they will experience increases in the number of arrears as homeowners struggle with their loan repayments, it has been suggested.
The Homeowners Advice Centre says that payments are jumping to standard variable rate and it is likely that some people will have to move or downsize. These are the people who could experience the most difficulties.
However, Al Elliot, an advisor, reminded people: "Negative equity is only a bad thing when it is realised, so as long as homeowners don’t sell or attempt to rearrange their lending, the risk is low."
This month the Council of Mortgage Lenders estimated that around 45,000 properties will be repossessed in the UK this year, which is the equivalent to about 0.38 per cent of the 11.74 million mortgages in the country.
There were 42,000 home loan approved in August 2008.
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