Regulator says Londoners are more likely to struggle with mortgages than the rest of the UK

Londoners and people living in the south-east of England are 55% more likely to struggle to pay mortgages than those living elsewhere in the UK, the data shows. disproportionate impact of the cost of living crisis.

The Financial Control Authority said on Friday that 5.9% of the 1.8 million mortgage holders in London and the South East are at risk of “financial stress” by mid-2024. According to the regulator, these People in financial difficulty have mortgages that cost them more than 30% of their gross income.

The findings highlight the vulnerability of Londoners’ living standards to high housing costs. The data shows that median income in the capital is no higher than in the rest of the country when calculated after housing costs.

The sharing of Mortgage The risk of default across the UK, excluding London and the South East, is 3.8%, with the lowest rates in the poorest regions where house prices have traditionally been lower, including the north-east of England ( 2.3%), Northern Ireland (2.4 per cent) and Scotland (2.8 per cent).

The FCA has released the figures as it finalizes guidance for banks to support borrowers at risk, including proactively contacting them about options to help them avoid default. The watchdog said banks approached 16.5 million customers to provide assistance last year and expects the number to grow to 20.5 million over the next 12 months.

“Our research shows that most people are keeping up with mortgage payments, but some people may be struggling,” said Sheldon Mills, FCA’s executive director of consumer and competition.

The picture for risky mortgages across the country improved to 356,000 from the 570,000 predicted last fall. The FCA said the 570,000 figure is based on interest rate expectations in September 2022, when bank rates are forecast to peak at 5.5%. Its data is calculated on the expectation that the rate will now peak at 4.5%.

The FCA found that London households with mortgages were more likely to experience financial hardship, in line with a series of recent surveys showing that living standards are no longer higher in the capital. normal.

Official figures show that although London households have a higher average after-tax income than any other region or country in the UK, after deducting the cost of rent or interest mortgage, their disposable income is no higher than average.

Income growth in the capital is also no longer rapidly outpacing other parts of the country, and productivity growth has been below the UK average since the 2008-09 financial crisis.

In a report last week, City Center blamed London’s productivity growth slows for a disproportionate degree of overall weakness in the UK economy since the crash 15 years ago.

The consultancy says a lack of housing affordability in the capital has prevented skilled people from moving there, affecting the value of output per hour worked.

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