Mortgage deals will ruin homeowners if prices fall
According to a survey by ESurv, in June there were was ‘glut’ of teeny tiny 15% mortgage deals (hello, Help to Buy!) which has pushed the number of at-risk homeowners to levels not seen since the financial crisis.
The number of households with a high Loan to Value rate is now 10,898, which now accounts for 1 in 5 new mortgages, compared to 1 in 9 a year ago.
There’s also a regional divide – the majority of high LTV mortgages are in the North, where more than a quarter of people have them. Meanwhile, in That London, only 7% of mortgages have a high LTV. That’s probably because in the North, you’ll be lucky to earn enough to feed the whippet, fill the tin bath and have enough left over for a latte - let alone save up an enormous deposit for a house.
All this means that if house prices suffer any kind of slump in the future, that these householders will be plunged into a graveyard of negative equity, because their mortgage will cost more than the house is worth.
Seem to remember that happening back in 2008…