According to the Financial Services Authority, many UK homeowners are falling behind on monthly mortgage payments. The report showed almost 350,000 are falling behind and have loan arrears of some kind. With interest rates soon to be on the rise, the UK economy needs as many homeowners as possible to be at full strength to avoid falling even more behind.

This is the absolute last factor the UK banking sector needs to be working against them. The report by the FSA found that many borrowers are paying some, but not all, of their monthly payment. Some borrowers are not making any payment at all.

Lenders are seeing that repossession benefits no one and have instituted an arrears add-on which seems to be helping many. Over 16,000 borrowers have had mortgage arrears added to their outstanding balance. The total, although minimal to what the industry has seen as a whole, is a whopping 44 million pounds.

Not only lenders realize that repossessions are helpful for no one. The government sees the logic as well. They have launched several different schemes to help those homeowners who need it the most. This has resulted in far fewer repossessions than what were once expected.

The FSA report also showed some signs of life from the struggling housing market. Net lending is over 8 billion pounds, which is the highest in 2 years. Also, an unexpected slight surge occurred in Q3 of this year.

Ian Perry, of the Royal Institution of Chartered Surveyors, commented on the spending cuts which will be taking place in the next few months, saying: "Despite some better economic data, fears over how future spending cuts will impact on the jobs market are clearly still weighing heavily on potential purchasers’ minds, with many deciding to ‘wait and see’ until the new year. Meanwhile, the lack of mortgage finance continues to deter first time buyers."