On Tuesday, new Bank of England data was released which showed that British households are increasingly falling behind on loan payments, with mortgage arrears increasing by 13% in the second quarter of 2023, causing them to reach the highest level since 2016.

The value of home loans in arrears increased to £16.9 billion ($21.1 billion), an increase of 29% year over year, as household disposable income has increasingly fallen under pressure from rising interest rates and rising unemployment.

Lewis Shaw, founder of Mansfield-based Shaw Financial Services, said in an interview with the news agency Newspage, “The speed at which mortgage arrears are increasing is terrifying and should give cause to pause at the next Bank of England interest rate meeting,” adding that unless the regulator changed its strategy, there would be a “mortgage meltdown” coming for the island nation.

In an effort to contain rising inflation, the Bank of England has been raising interest rates, even as a growing cost of living crisis has developed in the nation. As interest rates have risen, home loans have become more expensive to make payments on, since the mortgage’s have seen their interest rates rise alongside the regulator’s benchmark rate.

Shaw added, “This is dire data, and we know that it’s about to get an awful lot worse with 1.6 million mortgage holders due to renew over the next 12 months at significantly higher rates than anyone has been used to for well over a decade.”

Mortgage lending also fell during the second quarter, as gross advances dropped by $7.8 billion to $65.3 billion. Borrowing also dropped by nearly a third year over year, reaching the lowest level since the bottom of the collapse in lending seen during the second quarter of 2020, in the midst of the Covid-19 pandemic.