In the first three months of this year more than a fifth of homebuyers in the UK, who have a chequered credit history, have fallen behind on their mortgage payments and even those with top-quality ratings have seen a statistically significant rise in delinquencies.

New research from Standard & Poor’s is based on the behaviour of homebuyers, whose loans have been packed in to mortgage-backed-securities, accounting for 80 percent of the £43bn sub-prime mortgage market.

Total delinquencies – which are defined as arrears of more than 30 days – made up 21.73 percent at the end of march while those seriously delinquent by 90 days or more, including those already in foreclosure, edged in to double digits at 10.60 percent.

Unless lenders agree to modify loan terms, the figures show that more than £7bn worth of loans are at risk of defaulting. S&P believes that the loans backing the securities it rates are a representative sample of the market as a whole. The rise in sub-prime arrears threatens further problems not only for the economy but also for those financial institutions that bought securities backed by the loans.

Potentially more worrying is the small but notable increase in delinquency rates among prime mortgage-holders.

S&P, in the report on the performance of securities in this vastly larger market, calculated mortgage delinquency rates for the first quarter of 2008 were 2.41 percent while payments 90 days or more overdue were 0.79 percent. S&P said this showed a “sharp” rise from the previous quarter when the figures were 2.11 percent and 0.62 percent respectively.

Sean Hannigan, a director and credit analyst at S&P stressed that the numbers remained very small, “We have seen numbers like this two years ago.” However, he added: “The difference today is that borrowers are not being helped by rising house prices as they have been in recent years,” he said. “In previous years, homebuyers in difficulty could find another lender to refinance the mortgage. It could mean that now more homes wind up in repossession.”

The fact that a rise is occurring while employment is strong and interest rates low suggests that it may not only be macroeconomic factors making it hard for homeowners to pay their debts.

Of all sub-prime mortgages, roughly 80 percent have been securitised, as have about 20 percent of all prime mortgages. Data from the Council of Mortgage Lenders is more comprehensive but will not be produced until the summer.

Because S&P provides credit ratings on the debt, it must closely watch the underlying loans where payments from homeowners provide the interest and principal on the bonds.