Almost half a million UK homeowners have failed to meet a monthly mortgage repayment in the last six months. This is going to be a huge problem for the next couple of years for anyone who has a poor credit mortgage deal, or has risked taking on a low rate mortgage and will now be facing a mortgage rate hike. 

Anyone who found themselves unable to pay their mortgage to should take action immediately and discuss their options with the lender as soon as possible.

According to recent research by MoneyExpert, this found that since July last year around 463,000 people have missed mortgage payments. The personal finance website said that those aged between 25 and 34 were the most likely to have missed payments.

Sean Gardner, chief executive of MoneyExpert, commented: “Missing a mortgage payment doesn’t incur an automatic charge like failing to pay your credit card bill. But it is a sign of real distress as keeping a roof over your head should be the priority for most of us.”

The website cited the “difficult festive period” as a possible cause of many missed mortgage payments. Lenders have a duty to help people with missed mortgage payments and will usually only take serious action after 3 missed mortgage payments.

The number of mortgage approvals to first time buyers and home mover was at a record low last month as the banks struggled in the wake of the bad credit mortgages fiasco. Most buyers seem to be holding of making that move due to uncertainty in interest rates.

Only 42,088 mortgages were approved for first time buyer and home movers by banks in December, lower than at any time since records began in September 1997, figures from the British Bankers’ Association (BBA) showed.

This news, will hopefully add to pressure for a base rate cut, comes as more high street banks move to increase rates on popular tracker mortgages — penalising borrowers hoping to benefit from future reductions.

Abbey have just increased their tracker mortgages no doubt most lenders are making increases now to hopefully make cuts after the Bank of England meet in February. Brittannia, Alliance & Leicester and Nationwide have also increased tracker rates.

For first time buyers now more than ever will a deposit be an essential part of arranging a mortgage and making it onto the first rung of the property ladder.

Many lenders have reduced the maximum loan to values ratios on many of the mortgage deals, since October last year the tightening of credit in the money markets has forced many lenders to increase deposits to ten percent.

Many high street lenders Abbey, Halifax and Nationwide still offer loans of up to 95 percent loan to value.

It’s the more cautious lenders that are tightening their belts.

Since last June, ten lenders have pulled out of the 100% mortgages loan to value market while 11 lenders have reduced their maximum loan to value on some or all of their range since December.

The main 100% mortgages lenders Northern Rock, Birmingham Midshires, Coventry and Mortgage Express are still offering deals with income multiples reduced to suit todays market.

Surveyors are reporting a falling house prices similar to the 1990’s housing recession. The property market is in the midst of a property slump. The bad credit mortgages have taken effect according to many studies.

The report, by the Royal Institution of Chartered Surveyors (Rics), warns that the number of its members reporting falls in house prices has climbed to its highest level since the height of the last housing crash in the early Nineties.

Recent data shows house prices fell apart from a slight increase in October of 0.1%. Halifax and the Nationwide building society have suggested the market weakened in December.

The Rics study said that only one per cent of its surveyors reported a rise in house prices in the last three months of last year, compared to the 61 per cent who reported a fall.

According to the Halifax house price inflation fell sharply at the end of last year, but rising at an annual rate of 5.2%. They still rose by 1.3% in December half the rate from three months earlier. “This mixed pattern of monthly price rises and falls is a typical characteristic of a subdued market,” said Martin Ellis, chief economist at the Halifax.

There are many reasons now why rates need to be cut.

Businesses make capital and investment decisions based on possible growth of their companies. Or they may implement cost cutting measures.

The bad credit mortgages credit crunch has strangled credit; banks are in no mood to ease the pressure at the current rates.   

Economists tend to point to 4.5 to 5% as the neutral point. This is the level at which rates are seen as either slowing the economy or driving it forward. First time buyers might stand a chance of making a decision. Nobody wants to by at the wrong price.

It is hard to overstate the effect they have on consumers. Notwithstanding Halifax’s figures yesterday, the trend looks set for flat prices this year at best. Home-owners, used to the warm feeling from the automatic 10 or 20 per cent appreciation of their homes each year, are going to feel chillier and poorer.

 There is very little danger that a rate cut would produce an upturn in the housing market. Whatever happens to base rate, mortgage bills will remain much higher than then. The banks haven’t fully passed on last month’s cut. Remortgage rates shouldn’t change drastically.