The number of mortgage defaults are expected to increase over the next few months, according to the latest Bank of England data, while the volume of new loans will continue to fall amid warnings that the “golden era” of cheap deals is coming to a halt.

The UK central bank’s latest quarterly credit conditions survey paints a gloomy picture, with the number of mortgage deals already falling before the chancellor’s mini-Budget last month.

Lenders surveyed by the Bank said the availability of secured credit to households, namely mortgages, declined in the three months to the end of August, and with further falls expected over the next three months to the end of November.

Mortgage rates have increased sharply, with the average two-year fixed mortgage hitting 6.46% this week, the highest since the financial crisis in 2008, while the average five-year deal was 6.28%, according to Moneyfacts.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, tweeted: “The Bank of England’s credit conditions survey shows that lenders were preparing to tighten access to mortgages even before the mini-Budget. But the mini-Budget has greatly hastened the rate of deterioration. Good luck to anyone refinancing right now.”

The Bank survey also revealed that default rates on mortgages slightly increased between July and September and were expected to go up further between October and December, while defaults on credit cards and other unsecured loans are also set to rise as the squeeze on household finances from the cost of living intensifies.

RICS yesterday warned that homeowners will struggle to keep up with their mortgage payments and repossessions will rise next year as the UK’s 13-year housing market boom comes to an end.

Homeowners will struggle as house price growth slows, with repossessions set to rise