Northerners at greater risk of mortgage arrears

vivatifosi

From the FT:
http://www.ft.com/cms/s/0/87e7e6c8-83e8-11e1-9d54-00144feab49a.html#axzz1ro5byKHW

Says that British people are now more likely to be in arrears than a year ago and North of England hardest hit.

Study is by Standard and Poors, which says that arrears for 4th qtr of 2011 up 3.2 from 2nd qtr of 2010 (the previous analysed period). This is worse in the north where arrears are up 4.4.

Furthermore, 5.6% are in neg eq, but 8.5% in the north.

Maps:
http://www.ft.com/cms/s/0/87e7e6c8-83e8-11e1-9d54-00144feab49a.html

Standard and Poors original (requires registration):
http://www.standardandpoors.com/prot/ratings/articles/en/eu/?articleType=HTML&assetID=1245331846147

chewmylegoff

Seems logical, just as you're more likely to be in negative equity oop norff.

More arrears means more repos means more of a disconnect between north and south I guess.

vivatifosi

I wonder though chewy whether it will lead to - or perhaps has already led to - a difference in new mortgage lending conditions between the two.

chewmylegoff

I wouldn't be surprised given that a bank lending to you in the north knows that the price of your house is more likely to fall and you're more likely to stop paying the mortgage. If I was a bank and I only had a finite amount of money to lend I'd probably lend it to people buying houses in London first and foremost, which is probably what is happening already.

Expect the bank's surveyor/valuer is more likely to undercut agreed transaction prices that in the north as well.

teffers

Less Jobs = more likely to default on the mortgage

HAMISH_MCTAVISH

teffers wrote: »

Less Jobs = more likely to default on the mortgage

Exactly right.

Unemployment is the biggest reason for the difference.

Higher unemployment leads to higher levels of arrears and lower effective demand for houses. Which results in a higher ratio of supply to demand and thus lower prices. Which results in more people in negative equity.

Arrears rates are lowest in the South because employment is higher, so demand is higher and house prices are consequently more expensive.

As always, house prices and the size of falls, negative equity, arrears, etc, reflect the difference in economic performance between the North and South.

You won't have falling house prices without the associated increase in unemployment. Which should make those wishing for them think twice....

Graham_Devon

HAMISH_MCTAVISH wrote: »

You won't have falling house prices without the associated increase in unemployment. Which should make those wishing for them think twice....

You sure, Hamish?

HAMISH_MCTAVISH

Graham_Devon wrote: »

You sure, Hamish?

Can you point to any period in UK history where house prices have fallen significantly for any length of time without an increase in unemployment?

System

I'm not sure that anyone really needed the FT to tell us this.

HAMISH_MCTAVISH

Joeskeppi wrote: »

I'm not sure that anyone really needed the FT to tell us this.

Although it does raise some interesting points....

Arrears rates are highest where prices are cheapest.

And arrears rates are lowest where prices are most expensive.

Not exactly what you'd expect if you thought lax lending was endemic and the primary cause of both rising prices and subsequently arrears.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Can you point to any period in UK history where house prices have fallen significantly for any length of time without an increase in unemployment?

cause.effect.