Personal Debt: Insolvencies fall for now, but millions face mortgage hike

The number of people declared insolvent during the three months to the end of June fell for the second quarter in a row, figures from the Government's Insolvency Service show.

It found that between April and June, 26,956 people in England and Wales were declared bankrupt or took out an individual voluntary arrangement (IVA). This was a drop of 8 per cent on the previous three months but a rise of 4.2 per cent on the same period last year.

IVAs are plans that, with the agreement of the majority of creditors, allow borrowers to pay back a proportion of the debt they owe over a set period.

But accounting firm KPMG said that while personal insolvencies are down this quarter, they increased by 28 per cent over the 12 months to June. "Despite this fall in bankruptcy numbers, we can't take comfort in these figures," said spokesman Steve Treharne. "The five hikes in rates in the past year, and a further rise on the cards, continue to increase the pressure on the over-indebted. Those who have managed to keep their head above water with cheap fixed-term mortgages could also soon be struggling."

He pointed to figures from the Council of Mortgage Lenders that show around two million borrowers have mortgages with fixed rates due to end in the next 18 months.