16% of homeowners ‘risk default’

One in four people say they would struggle to keep up with their mortgage repayments if their income fell by just £300 a month, a survey showed.

Around 26% of homeowners said they would be in danger of defaulting on their mortgage if their monthly income fell by this level, according to credit reference agency Callcredit Information Group.

The research also found that 9% of people had deliberately inflated their income when applying for credit in a bid to qualify for a higher limit, while 6% had tried to take on more debt despite knowing they would struggle to meet repayments.

Around 35% of people pay off their credit card bills in full each month, with 5% of those questioned admitting they used to do this but now made only the minimum repayment or repaid a fixed amount each month.

The research found that people aged between 35 to 44, typically families with young children, were particularly likely to have applied for credit knowing they might not be able to repay it at 10%, while 13% had overstated their income when applying for credit and 7% had stopped repaying their credit card in full.

Graham Lund, managing director of Callcredit Information Group, said: “These statistics are extremely alarming.

“A significant proportion of people aged 35 to 44, many of who may have families to support, are living on a financial precipice where just one negative event, such as a reduction in paid overtime or an unexpected expense, could have disastrous financial consequences.

“What is of real concern is that some people are deliberately over-inflating their income when applying for credit in order to increase their credit limit.

“If the borrower is inflating their income significantly and then maxes out their high credit limit, they are running a serious risk of getting into financial difficulties and being unable to repay the debt.”

YouGov questioned 2,129 people between February 26 and March 1.

Source: The Press Association