UK mortgages: rate rises are hitting home
The recent house price boom was built on ultra-cheap money. Higher interest rates pose a threat to its foundations. But stricter lending regulations and a tighter labour market should limit the damage compared with past downturns.
In the financial crisis, the average UK house price fell 17.5 per cent in the 17 months to May 2009. That was not as bad as the early 1990s when values fell 20 per cent in cash terms.
Tighter regulations imposed since the financial crisis should make borrowers less exposed than in the past. Households’ average debt-to-income ratio was 131 per cent this year, compared with its 2008 high of 152 per cent.
This story originally appeared on: Financial Times - Author:Tax Cognition
