More than a fifth of UK homebuyers with poor or no credit histories have mortgage arrears of more than 30 days according to Standard and Poor's first quarter report.
Its study is based on homeowners whose loans have been packed into mortgage-backed securities, representing approximately 80 per cent of the total sub-prime mortgage market.
Standard and Poor's Ratings Services' total delinquency index rose to 21.73 per cent in the first three months of 2008 compared with 19.41 per cent in the previous quarter and 18.11 in the first quarter of 2007.
The index, which comprises those homeowners with more than 30 days of mortgage
arrears, also recorded that delinquencies spanning more than 90 days rose to 10.6 per cent from 8.81 per cent in the fourth quarter and 8.07 in the first quarter of 2007.
And it appears that even those with previously unblemished credit ratings could now be facing tough times. Delinquency rates among prime mortgage holders rose to 2.41 per cent in the first quarter compared with 2.11 per cent in the fourth quarter of 2007, while 90-plus days of delinquency increased to 79 per cent from 63 per cent.
The report said of the rise in delinquencies that: "A reduction in refinancing opportunities for borrowers, the large proportion of loans (approximately 25 per cent) due to revert from fixed or discount rates in the first half of 2008 into an environment of reduced credit availability, and the slowing economy, are likely to keep delinquency figures high for the foreseeable future.
"Despite cuts in headline interest rates," it said, "lenders' funding costs have remained elevated, which in turn has kept mortgage rates, and therefore payments, high."
The Council of Mortgage Lenders (CML), which reported 27,100 repossessions in 2007, predicts there will be 45,000 repossessions in 2008 from a total of 11.8 million mortgages outstanding. However, the report points out that: "This is only around one in 300 mortgages and is lower than half the rate experienced in the early 1990s."