Fitch Ratings a top credit ratings agency has warned the government that mortgaged homeowners in the UK are now more at risk of falling into arrears than in any other major developed country.
They also warn that the share of mortgaged homeowners missing more than three months of mortgage payments is most likely to double in 2023 to 1.5% as a result of high rates being charged to borrowers.
These figures are based upon the current number of residential mortgages in the UK which adds to approximately 135,000 households facing mortgage repayment arrears.
Research conducted by Fitch reveals Thar banks in the UK are more exposed to the housing market than in any of the 10 developed markets ranked by Fitch which include Canada, the USA, Germany, Australia and Italy.
A statement issued by Monsur Hussain at Fitch reveals “The UK scores the worst in terms of borrower risks.”
Fitch have also forecasted that the Bank of England will most likely raise the Bank Rate to a peak of 4.75%, up from 4% currently by May this year.
Jessica Hinds, director of economics at Fitch, said: “We have seen much bigger increases in mortgage rates, the Bank of England started tightening much earlier, and we have shorter mortgage terms than in other countries.”
Rather shockingly British borrowers fix for short periods of time either two or five years, buyers in the US commonly fix for around 25 years.
Mr Hussain from Fitch went on to say that in the year to November 2022 the average mortgage rates in the UK jumped by 4.5 percentage points compared to 3.5 points in the US.
As a result of this the UK’s housing market has come under immense pressure after mortgage rates increased dramatically when Kwasi Kwarteng’s mini-budget was revealed inciting chaos in financial markets.
Even though rates have since started to fall concerns about the cost of living crisis and ever increasing energy bills have deeply impacted employment stability and less money available to pay mortgage and everyday household costs.
This has already had a massive effect upon mortgage repayments and is undoubtedly resulting in many being forced to sell their homes with many being repossessed and then becoming homeless.
Although this might not be seen as an important issue for some it is indeed a massive problem for not only people becoming homeless but for local authorities that are already massively underfunded being forced to bear the burden of this.
I can’t see this getting better and a housing recession could well be on the cards in the near future.
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