THE number of homeowners falling behind on mortgage payments has hit its highest level since 2016.
Defaults have soared by 50.3 per cent since last year, and 9.2 per cent from the previous quarter, with outstanding balances hitting £20.3billion.
The big jump comes after homeowners saw their monthly mortgage bills double — or even triple — as they came off interest rates fixed in 2021.
Higher interest rates meant that the average mortgage shot up from 2.25 per cent to as much as six per cent last year.
But experts point out that the figure is still well below the levels after the 2008 financial crisis when £43.57billion of mortgage balances were in arrears.
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Around 1.6million households had to refinance their fixed rates in the past year and were faced with a £2,300 annual jump in housing costs.
Economists said the higher rates would cost mortgage holders an extra £12billion across the UK.
While there are hopes the Bank of England will lower interest rates, the Office for Budget Responsibility (OBR) has gloomily suggested there will be no immediate relief for homeowners.
It predicts mortgage rates will stay around four per cent until 2027.
Mortgage rates are priced off the bank rate, which is expected to fall to 4.2 per cent by the end of this year and slip to 3.5 per cent in 2027, according to the OBR.
The current bank rate is 5.25 per cent but the average mortgage rate rose to 5.76 per cent last month.
Rachel Springall, finance expert at Moneyfacts, said: “Lenders reacted to the change in swap rates, which led to numerous repricing of fixed-rate deals. It was a challenging time for borrowers and brokers.”
Industry experts have warned that homeowners will face mortgage pain for years because it takes longer for interest rate hikes to work their way through the market.
This is because the UK is largely dominated by fixed-rate mortgages, rather than tracker loans.
Those on fixed rates are only hit with higher bills when it is time to remortgage or move.
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Lego makes a quidditch
EXCITEMENT among Muggles for Harry Potter figures and Fortnite kits helped boost sales at Lego, despite bosses saying it 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 enjoyed a lift from the buzz around the blockbuster film.
Lego grew sales by 2 per cent to £7.5billion — although profits fell 5 per cent to £1.95billion.
Domino's 700 store ambition
DOMINO’S is trying to eat its rivals lunch with a plan to open another 700 stores across the UK over the next ten years.
The pizza chain, which currently has 1,300 sites, wants to hit 2,000 by the end of 2033.
This would make Domino’s bigger than McDonalds, but still lag well behind Greggs, which is planning 3,000 sites.
Domino’s boss Andrew Rennie said that he wants to boost revenues by increasing its lunchtime trade with a £4 meal deal which will include 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 lunchtime, but here it’s only about 15 per cent.
“That’s why 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 biggest Irish franchise owner for £61million.
Starling boss hire
DIGITAL lender Starling Bank has poached Ovo Energy's boss as its new chief executive.
Ovo, which is owned by billionaire Stephen Fitzpatrick, yesterday announced Raman Bhatia would be stepping down for a new leadership role outside the sector.
Minutes later, Starling Bank confirmed Mr Bhatia’s appointment as chief executive.
The hiring comes ahead of a widely speculated stock market listing.
Aldi wage boost in price war
ALDI has boosted staff wages once again in order to fend off competition from rivals.
The discount supermarket said it wants to remain the UK’s “best paying supermarket” and will increase store assistants’ pay from £12 to £12.40 an hour — and for workers within the M25 pay will increase from £13.55 to £13.65.
Retail chains have spent tens of millions of pounds raising pay for their workforces.
Aldi has spent £79million increasing pay this year and it will recruit 5,500 new jobs as it plans to open more stores.
The move comes after a string of rises 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 in the last quarter.
The Bank of England has feared that a wage spiral will lead to prices increasing as companies pass on higher staffing costs to consumers.
Building blues for business
THE housebuilding company Persimmon yesterday posted a halving in annual profits and warned of a tough year ahead.
Pre-tax profits slumped to £351.8million from £730.7million.
The number of home completions fell by a third to 9,922 from 14,868 in 2022.
Persimmon Chairman Roger Devlin said demand for homes remained high but “affordability and mortgage availability has been difficult for many of our customers, especially first-time buyers”.
Persimmon was one of eight housebuilders that was targeted by the Competition and Markets Authority last month.
There were concerns it was sharing sensitive information that could influence house prices by reducing the supply of new homes.
