Rise is arrears 'not hugely alarming'

An increasing number of people defaulting on their loans is an anticipated side effect of the recession, one expert has claimed.

According to Victoria Barnard, policy advisor at the Building Societies Association, it is not hugely alarming that the latest Bank of England data shows a rise in the number of people struggling to pay their debts, as the recession was inevitably going to have such an effect.

"We need to accept that unfortunately that is just one of the things that happen in a recession, people have difficulties and we just need to focus on making sure that not only customers work with their lenders but their lenders do what they can to help them stay in their home," she said.

Ms Barnard added that the fact the number of cases of homes being repossessed has fallen despite rising arrears shows that there is more emphasis on helping people cope and maintain ownership of their properties.

Last month, the Council of Mortgage Lenders cut its forecast of the number of homes it thinks will be repossessed in 2009 from 75,000 to 65,000.

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2009-07-06 12:59:45 © Moneyextra.com