UK housing market sees rising prices, but also increased arrears on mortgages

From Morningstar: 2024-05-30 06:20:00

The UK housing market is showing signs of improvement, with rising house prices, a resilient job market, and moderating inflation. However, there has been a spike in mortgages in arrears, according to Morningstar analysts. Arrears have increased by 50.3% on a year-on-year basis, reaching £20.3 billion in Q4 2023.

Despite the positive trend in house prices, the proportion of loans with higher loan-to-value ratios (LTVs) is on the rise. LTVs exceeding 90% accounted for 5.5% of gross mortgage advances in Q4 2023. Mortgage rates have fallen overall but remain high and volatile, with recent increases due to news of higher interest rates from the BOE.

The outlook for the UK housing market in 2024 is cautious, with expectations of modest price increases amid tight financial conditions and high inflation. While factors like low unemployment and wage growth support this outlook, borrowers are still adjusting to higher mortgage costs, leading to a continued increase in arrears, the highest in six years.



Read more at Morningstar: UK House Prices Are Rising Again, But So Are Arrears